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Asian shares slip, oil above $110 as Russia sanctions bite -Breaking


© Reuters. FILEPHOTO: This is how a broker responds to trading on his computer at Mumbai Stock Brokerage, India. February 1, 2020. REUTERS/Francis Mascarenhas

By Andrew Galbraith

SHANGHAI (Reuters – Asian stocks are under increasing pressure as oil prices surge past $110 per barrel. Investors worry about Russia’s aggression in Ukraine.

Following similar steps by Canada and Europe, US sanctions are tightening against Moscow. The United States now bans Russian flights from American airspace.

U.S. President Joe Biden made the announcement during Tuesday’s State of the Union speech. In which, he said that Russia President Vladimir Putin “will pay a continued high price over the medium term” for the invasion of Ukraine.

The MSCI Asia-Pacific share index was the broadest outside of Japan. It fell 0.46%, with China’s blue-chip CSI300 index 1.05%.

fell 1.81%.

Australia’s benchmark index rose 0.2% despite the uncertain mood in the country. Rising commodity prices and a rise in miners’ share values led to a higher benchmark index.

“The Russia-Ukraine war will likely continue to dominate the markets in the near future. “The announcement that Russia would not give coupons to foreign holders for its government debt ought to push investors even further towards safe-havens,” ING analysts stated in a note.

“Support to Ukraine’s EU Membership Process shows unity, but it is not likely that this will help ease tensions.”

The and closed Tuesday about 1.6% lower than the previous day, while the fell nearly 1.8%.

A number of companies in major industries have announced that they will suspend or withdraw from Russia due to the global sanctions.

Exxon Mobil (NYSE 🙂 stated Tuesday that it was exiting Russia, along with oil production, after similar British oil giants BP PLC (NYSE 🙂 Shell (LON 🙂 and Equinor ASA in Norway (NYSE :).

Exxon’s announcement came as oil prices rise. The global benchmark rose more than 5.8%, to $111.09 on Wednesday morning. This is its highest level since July 2014

U.S. West Texas Intermediate crude oil rose nearly 6 percent to $109.29. This is its highest level since September 2013.

Despite a worldwide agreement to reduce the oil reserves by 60 million barrels per day, prices rose despite this.

Carlos Casanova (senior Asia economist, UBP Hong Kong) stated that oil prices can still rise. It all depends on political factors, and making sure there is some oil supply from Russia offset by (not only) additional U.S. Shale.

After touching an all-time high of 117 on the previous day, the dollar last traded at 108.51 against the rouble.

Also, the dollar was stronger than the yen. It was 0.1% higher at 115.00 while the euro was $1.1126 flat. The dollar rose to 97.371 against a basket currency of major trading partners.

After falling to lows of eight weeks on Tuesday, the greenback rose as U.S. Treasury yields rebounded. An uncertain global growth outlook is causing investors to reduce their expectations that the Federal Reserve would increase interest rates significantly in the next months.

On Tuesday, the benchmark U.S. 10-year yield rose by 1.7541% to 1.711% and on Tuesday, the policy-sensitive 2-year yield surged to 1.725% from 1.305%.

The Fed funds futures market prices only a 5 percent chance of 50 basis point increases at March’s Fed meeting. However, a small 25 basis point increase is considered almost certain. [FEDWATCH]

Biden, in his Tuesday speech, called on companies to produce more semiconductors and cars in America so Americans are less dependent on imported goods. This is a strategy to combat inflation.

The dollar firmed and gold fell by 0.3% to $1.937.58 an troy ounce, after reaching an 18-month high.

The price of oil, which rose nearly 15% Tuesday due to strengthening conflict currency credentials on Tuesday, dropped 0.39%, or $44,272.46.