Kong (AFP) – Asian stocks gained on Thursday, after a robust rebound on Wall Street and a stunning rally in Europe, fueled by a collapse in oil prices and bargain-hunting following a Ukraine-fueled crash.
A glimmer of optimism for peace negotiations bolstered asset markets, which have been wracked by severe volatility in the two weeks since Russia invaded its neighbour, unleashing a wave of sanctions against Moscow.
However, observers cautioned with caution in the face of widespread uncertainty, with some predicting additional market losses and oil prices remaining high for long time.
Investors, on the other hand, are now having a rare moment of calm. They are buying cheap stocks after their US and European counterparts had a record day.
The Dow rose 2%, the S&P 500 rose 3%, and the tech-heavy Nasdaq rose an astounding 3.6 percent.
Frankfurt and Paris both rose more than 8%. Experts say the rises were caused by talks about more joint debt, green energy and renewables, defense, and subsidies for rising energy prices.
However, a big part of the rise in prices was due to a huge drop in oil prices, which gave some comfort to people who were worried about already high prices rising even more.
At one stage, Brent fell to as low as $105.60 at one stage, having reached a two-day high of $139, on optimism that the massive volumes of Russian oil removed from the market by sanctions could be fully replaced by sourcing from elsewhere.
The United Arab Emirates said Wednesday it will push other members of the OPEC cartel to increase production, as US negotiations with Venezuela’s biggest oil producer looked to be progressing.
Iraq said it might be able to make more, and nuclear talks with Iran looked like they were going well.
Both major futures fell in Asian trading on Thursday, but the Ukraine crisis is still going on and there isn’t a lot of oil available, so the commodity is expected to keep going up.
Optimists got a boost when Ukraine’s President, Volodymyr Zelensky, said that the government was willing to talk about Moscow’s demand that it stay neutral in exchange for security guarantees.
“Certainly, we are prepared for a diplomatic solution,” Ihor Zhovkva, deputy chief of staff, told Bloomberg Television.
“Our primary precondition for engaging in such conversations is an early cessation of hostilities and the evacuation of Russian soldiers.”
This comes after Russia’s foreign ministry said that it would be better if it could get what it wants in Ukraine through talks.
It will be important for investors to keep an eye on a meeting of the countries’ foreign ministers in Turkey on Thursday. This will be the first high-level communication between Kyiv and Moscow since the invasion.
That might help alter the mood, “if you see a settlement to the Ukraine crisis – and we are hearing rumors that Russia and Ukraine are getting closer to the discussion stage,” said Nadia Lovell, a UBS Global Wealth Management analyst.
However, she said that she anticipated further turbulence in the future.
Tokyo’s stock market surged 3.8 per cent higher, while Hong Kong, Seoul, and Taipei all gained more than 2%. Shanghai, Sydney, Singapore, Manila, and Wellington all saw significant increases.
Markets, however, remain significantly down year to date, according to Stephen Innes of SPI Asset Management. “It has been a distressing week for investors; bear in mind that these are financial crisis-style markets, when everyone is trading headlines and following the same intraday momentum.”
“However, this should serve as a warning that systematic flow has the ability to swing markets in any direction, particularly when the active investor base is on the sidelines.“
