Asian markets higher after Russia sanctions push US stocks into correction

Asia-Pacific equities and European stock futures rose on Wednesday as financial markets steadied after concerns about a potential conflict in Ukraine pushed the US S&P 500 into correction territory.

Hong Kong’s Hang Seng index rose 0.5 per cent on Wednesday, while China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks climbed 1.1 per cent. Markets in Japan were closed for a national holiday.

Futures markets indicated Europe’s regional Stoxx 50 share index would open 0.3 per cent higher, while the S&P 500 was set to rise 0.5 per cent.

The lift for equities came after the S&P 500 closed 1 per cent lower on Tuesday, leaving the US stock benchmark down more than 10 per cent from its most recent peak after Russia’s president Vladimir Putin directed his military to enter Ukraine’s rebel-held Donetsk and Luhansk regions.

That move was followed by a flurry of sanctions from western nations, with the US announcing measures targeting two of Russia’s largest financial institutions as President Joe Biden accused Putin of beginning an “invasion” of Ukraine and warned that Washington was prepared to take further action.

“To put it simply, Russia just announced that it is carving out a big chunk of Ukraine,” said Biden. “He is setting up a rationale to take more territory by force . . . He’s setting up a rationale to go much further. This is the beginning of a Russian invasion of Ukraine.”

But analysts said the market response to announcements from Biden and other western leaders was underwhelming.

“There has been a quite muted market reaction to the announcements of sanctions on Russia by the US and Europe,” said Robert Carnell, chief Asia strategist at ING. Carnell noted US equities had posted losses but added that the falls “were small compared to some recent moves.”

Oil prices were also steadying after wild swings on Tuesday that took Brent crude, the international benchmark, to a high of $99.50 a barrel as traders grappled with the possibility of disrupted supply from Russia.

On Wednesday, Brent crude rose 0.3 per cent to $97.08, leaving the international oil benchmark up almost 4 per cent over the past three days and on a course for its largest weekly gain since mid-January.

In currencies, the New Zealand dollar rose as much as 0.7 per cent to a five-week high of $0.6777 against its US counterpart after the country’s central bank raised rates 0.25 percentage points and signalled more tightening was on the way.