SYDNEY- Asian shares were trying to rally on Thursday after reassuring comments from the Federal Reserve helped Wall Street bounce, even as the war in Ukraine sent oil and commodity prices spiralling ever higher in a grim omen for global inflation.
Brent crude is now up almost 20 percent on the week, while everything from coal to natural gas and aluminum are on fire as Western nations tighten sanctions on Russia.
Ukraine’s second biggest city, Kharkiv, suffered heavy bombardment on Wednesday and dozens of countries referred Moscow to be probed for potential war crimes.
“So far, investors appear to be discounting a greater chance of “stagflation-lite”, meaning sanctions result in even more inflation in developed markets and a bit less economic growth,” said Thomas Mathews, a markets economist at Capital Economics.
The rush to commodities lifted resource-rich Australian stocks 0.9 percent, while Indonesia was just off a record high. Japan’s Nikkei managed a modest 0.5 percent gain, while MSCI’s broadest index of Asia-Pacific shares outside Japan nudged up 0.4 percent.
MSCI added to Russia’s financial isolation by deciding to exile the country from its emerging markets index, while FTSE Russell said Russia would be removed from all its indices.
Fitch slashed Russia’s sovereign credit rating six notches to “junk” status, saying it was uncertain the country could service its debt, and Moody’s soon followed.
After bouncing overnight, S&P 500 stock futures were down 0.2 percent, while Nasdaq futures eased 0.3 percent.
EUROSTOXX 50 futures slipped 0.5 percent, and analysts at JPMorgan had a stark warning for clients. – Reuters
