Tom Westbrook

SINGAPORE, (Reuters) – Asian stocks remained steady on Wednesday. However, demand for safe havens dipped a bit as investors viewed Russian troop movements in Ukraine and the initial Western sanctions as allowing room to avoid war. New Zealand saw a rate increase as a positive sign that it would be possible to raise its dollar.

However, commodity prices are high and traders remain nervous about the European’s eastern edge.

The overnight oil price reached a 7-year peak, while corrections were in place. It had fallen more than 10% since January’s record high. [O/R][.N]

After U.S. Vice President Joe Biden declared sanctions against Russian banks and certain elites, the U.S. was able to open diplomatic channels by allowing for 0.4% increase in early Asia trade.

MSCI’s Asia-Pacific share index outside Japan fell by 0.1%. closed to celebrate the birthday of Emperor.

Chris Weston from Pepperstone’s research department stated that the market views various sanctions as “modest and possibly not as aggressive” than feared.

He said, “For the moment, one could discern there is a feeling across markets that Russian troops would hold Donbass but not push any further,” and referred to eastern Ukraine, which Russia recognizes as independent, and sent troops to strengthen.

Britain and the European Union also declared plans to target Russian elites and banks, while Germany halted Russia’s Nord Stream 2 pipeline. This resulted in a 11% increase in Europe’s benchmark gasoline price.

The wheat futures rose on Tuesday as well, marking the highest jump in over three and a half years. Additionally, corn futures reached an 8-month high because of concerns that conflicts could affect grain supply from Black Sea export regions. [GRA/]

Futures settled at $96.74 per barrel on Tuesday, after easing off Tuesday’s high of $99.50. Futures were at $91.92 per barrel.

“In the simplest terms, investors worry about a stagflationary stress to Europe, and to a lesser extent, the global economic system generally,” stated Shane Oliver chief economist of AMP (OTC) Capital in Sydney.

METAMETALS BID

Inflation has been a problem in Ukraine, and investors have suffered from the rising interest rate as central bank around the world move to reduce it.

On Wednesday, The Reserve Bank of New Zealand made its third rate increase in a row, raising its benchmark cash interest rate by 25 basis point to 1%. Investors were surprised however, with its hawkish tone.

New Zealand dollars rose 0.6% during the news. This is its longest run of daily gains for almost two years. Australia and New Zealand bonds came under increasing pressure. [NZD/]

China stands out as a noteworthy exception in the rate falling trend. According to private research, nearly 90 banks have reduced mortgage rates this month, according to an independent group.

The movements in currency trading were relatively muted elsewhere, although some have hoped that there will be no war in Ukraine. [FRX/]

After hitting 114.50 yesterday, the yen was at 115.00 USD. Euro hovered at $1.1331, its 50-day average.

Supported by rising commodity prices, the Australian dollar reached a 2-week high of $0.7235.

Cash Treasuries in Asia were closed due to holiday in Tokyo. However, benchmark 10-year futures were still steady with an implied yield of 1.96 %. [US/]

While precious metals fell from overnight highs, they remain highly valued due to fears about war. While gold was steady at $1.898 an ounce (up more than 8%) from its December lows), platinum and palladium rose on concerns about disruptions in supply. [GOL/]

Since December, platinum has risen more than 20% and palladium more than half a percent.

Shafali Sachdev (OTC: Wealth Management), head of FX in Asia for BNP Paribas, said that this is even more remarkable when viewed against the backdrop of rising rates.