Asian stocks fall as Russia bombs Ukraine nuclear power plant
Stocks were down Friday in Asia after another turbulent day on Wall Street as investors remained concerned about the broader impact of Russia’s invasion of Ukraine.
Shares fell more than 2% in Tokyo and Hong Kong and fell in most other Asian markets. US futures were lower. The S&P 500 fell 0.5% on Thursday and the Nasdaq 1.6% as technology companies led the way lower.
Oil prices retreated from their recent highs and European markets also closed lower.
Russian troops were bombing Europe’s largest nuclear power plant in Ukraine, raising concerns about radiation risks.
A spokesperson for the plant in Enerhodar, Ukraine, said in a video posted on Telegram that there was a “real threat of nuclear danger”. Andriy Tuz said shells fell directly on the plant and set fire to a non-functioning reactor that contained nuclear fuel.
Elsewhere, Russian forces gained ground in their bid to cut the country off from the sea, as Ukrainian leaders called on citizens to rise up and wage guerrilla warfare against the invaders.
Tokyo’s Nikkei 225 index fell 2.7% to 25,881.32 while Hong Kong’s Hang Seng fell 2.7% to 21,866.81. In Seoul, the Kospi fell 1.2% to 2,714.80. The Shanghai Composite lost 0.3% to 3,470.47.
Australia’s S&P/ASX 200 fell 0.9% to 7,088.60.
On Thursday, the S&P 500 fell 23.05 points to 4,363.49. The Dow Jones slid 0.3% to 33,794.66. The Nasdaq lost 214.07 points to 13,537.94.
Small company stocks also lost ground. The Russell 2000 Index fell 26.46 points, or 1.3%, to 2,032.41.
The pullback left indices on pace with weekly losses, as bond yields were mostly flat in the meantime. The 10-year Treasury yield slipped to 1.85% from 1.86% on Wednesday night.
Stocks rallied midweek after Federal Reserve Chairman Jerome Powell said he favored a modest interest rate hike at a policy meeting later this month. That reassured investors who feared he would support more aggressive measures to fight inflation.
But Powell warned on Thursday that the fighting in Ukraine is likely to further amplify the high inflation that is troubling global economies. He said he was determined to do whatever is necessary to slow inflation, pointing to the high-risk challenge of raising interest rates enough to ease price pressures without triggering another recession.
Russia is a major oil producer and prices have risen as global supplies are threatened by the conflict, raising fears that persistent inflation could get even higher.
Powell said inflation is expected to rise about 0.2 percentage points for every $10 increase in the price of a barrel of oil. Oil prices have jumped $40 a barrel since early December to around $110, suggesting price pressures will be higher than they otherwise would have been in the months ahead.
Early Friday, benchmark U.S. crude rose $2.09 to $109.76 a barrel in electronic trading on the New York Mercantile Exchange. It lost $2.93 to $107.67 a barrel.
Brent crude, the international price standard, added $1.54 to $112.00.
Trading on the Moscow Stock Exchange remained closed on Thursday. The Russian ruble has lost another 15% against the US dollar and is worth less than 1 cent. It has plunged since Western governments imposed sanctions that cut off much of Russia’s access to the global financial system.
The exposure and overlap of US markets vis-à-vis Russia is relatively low. The real risk is European banks’ exposure to Russia, Young said.
“If European banks are starting to feel the contagion of this, then it’s about our exposure to Europe, which surprisingly is still reasonably low,” she said. “That doesn’t mean there isn’t sentiment risk. No one likes to hear about financial markets freezing.”
Russia’s invasion of Ukraine has been the dominant issue for investors all week as they try to gauge its global economic impact.
“For a world that was already struggling with worrying (cost-push) inflation before the invasion of Ukraine, soaring commodity prices due to geopolitical fallout are not just an inconvenience, but rather a threat. constraining economy,” Mizuho Bank said. said in a comment.
Investors will receive an update on the US labor market on Friday when the Department of Labor releases its report for February.
“What we’re prepared to do is take a close look at the jobs report tomorrow to see what the Fed needs to do and the state of the economy,” said senior investment strategist Rob Haworth. at US Bank Wealth Management. earnings will provide a good reading of inflation and consumers’ ability to keep pace.
In currency trading, the US dollar bought 115.37 Japanese yen, down from 115.47 on Thursday. The euro weakened to $1.1029 from $1.1066.
AP Business Writers Damian J. Troise and Alex Veiga contributed.