By Gina Lee
Investing.com – Asia Pacific stocks were down on Friday morning, with investors weighing the escalating Russian invasion of Ukraine and the global growth risks from soaring costs of commodities including oil.
Japan’s Nikkei 225 fell 1.90% by 9:44 PM ET (2:44 AM GMT). Data released earlier in the day showed that the jobs/applications ratio was 1.2, and the unemployment rate was 2.8%, in January 2022.
South Korea’s KOSPI fell 1.13%, with the consumer price index growing 3.7% year-on-year and 0.6% month-on-month in February.
In Australia, the ASX 200 fell 0.86%, with retail sales growing 1.8%.
Hong Kong’s Hang Seng Index slid 2.19%.
China’sShanghai Composite was down 0.27% while the Shenzhen Component was down 0.35%.
U.S. Treasuries rallied, with the benchmark 10-year yield falling below 1.80%. The gap between two-year and 10-year yields is the smallest since March 2020, indicating expectations of slower economic growth.
In the latest news on the invasion, Russia began shelling the Zaporizhzhia power plant in Enerhodar, Ukraine. Some investors warned that the West’s sanctions in response to the invasion are creating risks including high raw material costs, as well as damage to global confidence that could decrease investment and the potential for credit stress to ripple through markets.
Slowing profit growth, tightening liquidity, and valuations that have yet to become cheap were already challenges, and “what you are seeing on the geopolitical front is only exacerbating those issues,” Richard Bernstein Advisors LLC deputy chief investment officer Dan Suzuki told Bloomberg.
Russian President Vladimir Putin told his French counterpart Emmanuel Macron he plans to fulfill the goals of his invasion, which includes toppling the Ukrainian government. The U.S. stepped up sanctions, targeting eight wealthy Russians and their families, while S&P Global (NYSE:SPGI) Ratings slashed Russia’s credit rating for the second time in a week.
Central banks’ monetary policies were also on investors’ minds. In a second day of testimony before Congress, U.S. Federal Reserve Chairman Jerome Powell reaffirmed that the central bank is set to start a series of interest-rate hikes while emphasizing that the Fed would move judiciously.
Powell added that the Russian invasion is leading to risks for inflation and growth. He again backed a quarter-point interest rate hike later in the month, but added, “we are prepared to raise by more than that” at one or more meetings if the move fails to bring inflation down.
“Rising commodity prices are a big concern for the market, prompting fears of stagflation. The economic clinch point of this war is commodity prices. Higher energy prices, slowing growth, and surging inflation are not a good outlook,” City Index senior financial markets analyst Fiona Cincotta told Bloomberg.
U.S. data released on Thursday showed that the services PMI was 56.5 in February and that 215,000 initial jobless claims were filed over the past week. Investors now await the latest U.S. jobs report, including non-farm payrolls, due later in the day.