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Asian Stocks Mixed, Oil Falls as Russian Attacks Intensify

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Hong Kong Financial Markets (Copyright 2022 The Associated Press. All rights reserved)

Stocks were mixed in Asia and oil prices fell on Monday as uncertainty over the war in Ukraine and stubbornly high inflation kept investors guessing what was coming.

Tokyo and Sydney advanced, while Hong Kong, Seoul and Shanghai fell. US futures were higher.

Ukrainian President Volodymyr Zelenskyy has vowed to continue negotiating with Russia as the Russians forcibly shelled a military training base near the Polish border, killing nine and wounding dozens. Talks aimed at reaching a ceasefire failed again on Saturday.

The expansion of Russia’s offensive into western Ukraine comes amid warnings of the conflict’s widening impact. Moody’s Investor Service said it was reviewing its credit ratings for both countries in light of rising economic, financial and security risks.

The spread of coronavirus outbreaks in China have added to uncertainties, with authorities ordering a lockdown at the Shenzhen manufacturing and technology hub near Hong Kong that could worsen supply chain disruptions.

Hong Kong’s Hang Seng Index lost 3.8% to 19,779.91 and the Shanghai Composite Index fell 1.3% to 3,266.73.

Chinese stocks have also come under selling pressure due to the threat of delisting major Chinese companies from U.S. stock exchanges. A report in the state-owned Economic Daily newspaper said on Monday that regulators are negotiating to resolve a dispute over auditing rules.

The Securities and Exchange Commission has moved to require US-listed foreign stocks to disclose their ownership structures and audit reports. That has been on top of technology-related sanctions against some companies.

Wang Sheng, head of China International Capital Corp’s investment banking division, said in an op-ed that China and the United States should be able to reach an agreement.

Tokyo’s Nikkei 225 Index rose 0.6% to 25,318.75 and the S&P/ASX 200 Index gained 1.2% to 7,147.80. South Korea’s Kospi lost 0.9% to 2,637.07.

On Friday, the S&P 500 fell 1.3% to 4,204.31. The Dow Jones Industrial Average lost 0.7% to 32,944.19, while the Nasdaq Composite Index lost 2.2% to 12,843.81. The Russell 2000 index of smaller companies fell 1.6% to 1,979.67.

World markets have been rocked by dramatic reversals as investors struggled to guess how Russia’s invasion of Ukraine will affect prices for oil, wheat and other commodities produced in the region.

That raises the risk that the US economy could struggle under a toxic mix of persistently high inflation and stagnant growth. The Federal Reserve is expected to raise interest rates at its meeting this week as it and other central banks move to stamp out the highest inflation in generations, while trying to avoid causing a recession by raising rates too high or too fast.

Amid all the uncertainty, US stocks remain about 10% below their high from earlier this year, while crude oil prices remain more than 40% higher by 2022. Until now.

Benchmark US crude oil lost $3.16 to $106.17 a barrel in electronic trading on the New York Mercantile Exchange. It rose $3.31 a barrel on Friday to $109.33 a barrel.

Brent crude oil, the standard for international prices, fell $3.05 to $109.59 a barrel.

The US dollar rose to 117.83 Japanese yen from 117.35 yen. The euro weakened to $1.0906 from $1.0926.

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