Asian equities follow US markets south

Asian markets fall as oil prices surge

Surging oil prices overnight sparked global growth fears as the Ukraine-Russia situation intensified and oil supply chains were thrown into chaos over sanctions. That reversed the peak-Ukraine rally of the day before and sent US markets tumbling. The S&P 500 fell 1.55%, the Nasdaq fell 1.59%, and the Dow Jones tumbled by 1.78%.

In Asia, some short-covering has lifted futures on all three indexes by around 0.30%, but Asian markets have followed New York’s lead and headed south as oil prices jumped once again this morning. Japan’s Nikkei 225 is down by 2.0%, but South Korea’s Kospi is holding its own after returning from a holiday yesterday, rising just 0.10%.

The good news ends there with China’s Shanghai Composite down 0.40% and the CSI 300 falling by 1.05% after the PBOC also drained liquidity today. Hong Kong is also 1.0% lower. Singapore is down 0.50%, with Taipei 0.40% lower. Jakarta is down by 0.50% and Kuala Lumpur by 0.20%, Bangkok is unchanged, and Manila is 0.80% in the red. Australian markets, boosted by surges in commodity and energy prices, are marginally higher. The ASX 200 is 0.05% in the green, and the All Ordinaries has risen by 0.25%.

Asian markets have been aided by the slight rise in US futures today, but it is likely to be a temporary situation. Brent crude above USD 110.00 a barrel is not good news for regional markets. European equities never passed go yesterday and headed directly south. That state of affairs is likely to persist today and even the buy-the-dip gnomes of New York will struggle to construct a bullish case later this evening.

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