BEIJING (AP) – Asian markets surged while Europe opened lower yesterday, after oil prices recovered some of a decline the day before that had eased inflation fears.
Futures for Wall Street’s benchmark S&P 500 index and the Dow Jones Industrial Average were down 0.4 per cent as Russian attacks on Ukraine intensified two weeks as fighting entered its third week.
Markets rallied on Wednesday after oil plunged, but economists warned that was due to changes in futures contracts and other factors, not war developments.
Yesterday, prices rebounded by nearly USD6 per barrel in London and nearly USD4 in New York.
Forecasters warned markets will stay volatile, as the Russian and Ukrainian foreign ministers were meeting in Turkey for negotiations.
“Markets seem to have latched onto a couple of slightly less dismal clues as an excuse to rally hard,” said ING economists in a report. “The basis for that optimism – it’s actually pretty thin.”
In early trading, the FTSE 100 in London lost 0.6 per cent to 7,146.60 and Frankfurt’s DAX slipped 1.9 per cent to 13,592.84. The CAC 40 tumbled two per cent to 6,261.35.
The retreat came as the European Union (EU) statistics agency reported that inflation in the 19 countries that use the euro rose by an annual 5.8 per cent in February, a record high for the fourth month in a row.
European economies import more Russian oil and gas and face a bigger potential shock from the war. That might prompt European governments to use more economic stimulus, which pushes up stock prices.
European stocks had rallied on Wednesday even more than the United States (US) market, with Germany’s DAX jumping 7.9 per cent and France’s CAC 40 soaring 7.1 per cent.
In Asia, the Nikkei 225 in Tokyo rose 3.9 per cent yesterday to 25,690.40 and the Shanghai Composite Index added 1.2 per cent to 3,296.09. The Hang Seng in Hong Kong advanced 1.3 per cent to 20,890.26. The Kospi in Seoul jumped 2.2 per cent to 2,680.32 as trading resumed after a day off for South Korea’s presidential election.
Sydney’s S&P-ASX 200 added 1.1 per cent to 7,.130.80. New Zealand and Southeast Asian markets also advanced.