By Daniel Leussink

TOKYO (Reuters – Asian shares surged Wednesday following the announcement by Moscow that some of its troops would be returning to their base after exercises. Investors were relieved.

The Ukraine crisis, which has turned into one the worst crises in East West relations, is a major concern for investors.

MSCI’s largest index of Asia-Pacific shares, outside Japan, surged 0.9% on Wednesday in regional trading. This was in contrast to a rebound in European and U.S. stocks Tuesday.

Kyle Rodda is a market analyst for IG Melbourne. He said, “If we see further signs that diplomacy works and a decrease in tensions, we might see a kind reversal trade.”

Rodda stated that stocks will likely be boosted by the lower implied volatility. He also said that this would impact oil and gold prices.

soared 1.9% to rebound from two days of falls, while Australia’s S&P/ASX200 gained half a percent.

Other regions in the region saw Hong Kong’s index jump 1.1% in the early part of the session and China’s CSI300 Index rise 0.4%.

Investors were likely to pay attention to developments in economic and monetary policy amid speculation that the U.S. Federal Reserve could raise rates 50 basis points by March.

One of the most important events was Wednesday’s release of minutes from Federal Reserve’s January meeting. It also included January consumer inflation data for Canada and Britain.

The data from Wednesday indicated that China’s factory-gate inflation and China’s consumer price inflation were both lower than anticipated in January.

Rodda from IG stated that tensions surrounding Ukraine have “distracted the fact there remain major risks and concerns over global monetary policy, and how it could affect financial market,” he said.

As geopolitical tensions decrease, that could be a trigger for more volatility.

On Tuesday, the yield on benchmark stood at 2.0311%. This was compared to its U.S. closing of 2.056%. This yield rises in line with the expectations of traders of higher Fed funds rates was 1.5569% versus 1.56744% at U.S.

After a decline of two weeks, currency markets were quiet. The 96.009 level was held steady after Tuesday’s withdrawal from the market’s high after the Ukraine geopolitical risks premium. [FRX/]

Analysts at Westpac stated in a note that they expect an aggressive Federal Reserve hiking cycle and should maintain a base to support the DXY.

The exchange rate for the yen was 115.67 dollars.

The barrel was $91.98/barrel after falling from the seven-year record set on Monday. The barrel price was $93.16, down 0.1%

The price of gold was slightly higher. Gold was sold at $1,850.54 an ounce [GOL/]