Oil prices and Asian stocks gain after tech rally on Wall St
Stocks edged higher in Asia and oil prices also rose after a tech-driven rally on Wall Street. Trading was light with many regional markets, including those in China, closed for the holidays.
Tokyo’s Nikkei 225 gained 0.2% to 27,787.98 and Seoul’s Kospi gained 0.1% to 2,759.20. The S&P/ASX 200 gained 0.2% to 7,527.90. India’s Sensex slipped 0.1%.
Russia’s invasion of Ukraine has heightened concerns about rising inflation and its impact on global economic growth. Prices for everything from food to clothing were already rising, and the war added to volatility in energy prices.
The World Bank lowered its 2022 growth forecast for the Asia-Pacific region to 5% from 5.4%, in part due to disruptions in commodity supplies, financial strains and rising prices. This follows a rebound to 7.2% growth in 2021 after many economies experienced slowdowns with the onset of the pandemic.
The report predicts slower growth and rising poverty in the Asia-Pacific region this year, as “multiple shocks” compound problems for people and businesses.
Oil prices are hovering around $100 a barrel, a challenge for many countries that depend on oil and gas imports.
U.S. crude climbed 61 cents to $103.89 a barrel early Tuesday in electronic trading on the New York Stock Exchange. Brent crude rose 60 cents to $108.13 a barrel.
The price of U.S. benchmark crude jumped 4% on Monday and Brent crude, the standard for international pricing, rose 3%.
In New York on Monday, the S&P 500 rose 0.8% to 4,582.64, the Dow Jones Industrial Average gained 0.3 to 34,921.88 and the tech-heavy Nasdaq added 1.9% to 14,532.55.
Small company stocks also gained ground. The Russell 200 Index gained 0.2% to 2,095.44.
Twitter jumped 27.1% for the S&P 500’s biggest gain after the company revealed that Tesla’s Elon Musk had taken a 9.2% stake in the social media platform. In recent weeks, Musk has publicly questioned the company’s commitment to free speech. The gains were a key factor in lifting the broader communications sector and keeping the S&P 500 in the green even as just under half of the companies in the index fell.
Big tech stocks did the heavy lifting on Monday, offsetting losses elsewhere. These companies have expensive stock values and tend to have more leverage to drive the market up or down. Apple rose 2.4% and Microsoft 1.8%.
Investors continue to monitor the conflict in Ukraine, where Russia could face even tougher economic sanctions now that details emerge of what appears to be deliberate killings of civilians.
European Union foreign policy chief Josep Borrell joined a growing chorus of international criticism over the alleged atrocities, saying the 27-nation bloc “will urgently move forward to work on new sanctions against Russia”.
The 10-year Treasury yield was 2.40% early Tuesday, close to its Monday close of 2.41%.
Bond yields have climbed all year as Wall Street braces for higher interest rates. The Federal Reserve has already raised its overnight rate once, the first such increase since 2018. The central bank is expected to continue raising rates throughout 2022 to help counter the impact of higher inflation.
The Fed is due to release the minutes of its last meeting on Wednesday.
In currency trading, the US dollar fell from 122.79 yen to 122.91 Japanese yen. The Euro climbed to $1.0985 from $1.0976.