TOKYO- Asian shares rallied on Wednesday as fears of a Russian invasion of the Ukraine this week dissipated after Moscow indicated it was returning some troops to base from exercises, delivering investors a measure of relief.
The tension between world powers over the Ukraine situation, which has developed into one of the deepest crises in East-West relations for decades, has been front-and-center of investors’ minds.
MSCI’s broadest index of Asia-Pacific shares outside Japan surged 0.9 percent in early regional trade on Wednesday, playing catch-up with a rally in US and European stocks on Tuesday.
“If we continue to see signs that diplomacy is working and a de-escalation of tensions, I think we’ll see a kind of reversal trade,” said Kyle Rodda, a market analyst at IG in Melbourne.
“We’ll probably see stocks boosted on the fact that implied volatility is a little bit lower,” Rodda said, adding that it would likely weigh on oil and gold prices.
Japan’s Nikkei soared 1.9 percent to rebound from two days of falls, while Australia’s S&P/ASX200 gained half a percent.
Elsewhere in the region, Hong Kong’s Hang Seng Index jumped 1.1 percent early in the session, and China’s CSI300 Index was up 0.4 percent.
Investors’ attention was likely to turn to economic and monetary policy developments amid ongoing speculation the US Federal Reserve might raise rates by a full 50 basis points in March.
Among events in focus, was the release of the minutes from the Federal Reserve’s January policy meeting later on Wednesday as well as January consumer inflation data from the United Kingdom and Canada.
China’s factory-gate and consumer price inflation both came in lower than expected in January, data on Wednesday showed. – Reuters
