Stocks flat as oil prices climb
A man wearing a protective mask walks past an electronic board displaying Japan's Nikkei index and various countries' stock market index prices outside a brokerage in Tokyo, amid the coronaviruses disease COVID 19 outbreak.
After Russian President Vladimir Putin said that on- and-off peace negotiations have returned to a dead end for us, which has also hurt the euro, share market sentiment was capped by gains in oil and other commodity prices.
The broadest index of Asia-Pacific shares outside Japan rose 0.5% and Japan's Nikkei jumped 1.54%.
In March, consumer prices in the U.S. increased by the most in 16 -- 1 2 years, as war in Ukraine boosted the cost of gasoline to record highs, cementing the case for a 50 basis points interest rate hike from the Federal ReserveFederal Reserve next month.
The underlying inflation pressure on goods dropped by the most in two years, as goods prices, excluding food and energy, dropped by the most in two years.
The U.S. yields fell on Tuesday, snapping seven consecutive sessions of gains, though they lost ground late in the day and into early Wednesday due to the inflation data.
The yield on 10 year Treasury notes was 2.7498%, compared to a three year peak of 2.836% before inflation data.
The yield for the two year was 2.4362%.
Clara Cheong, a strategist at JPMorgan Asset Management, said that the moves in yields gave a nod to the rhetoric that U.S. inflation has likely peaked or is very close to it.
If inflation continues on this path, there will be less pressure on the Fed to be aggressive in the second half of the year, and it is unlikely that this will change the trajectory of the Fed from hiking 50 basis points in May. Equity markets gave back gains as oil rose above $100 barrel as progress in Russia-Ukraine peace talks came to a standstill and China started reopening Shanghai very slowly. The price of crude dropped below $100 earlier this week, but rallied sharply on Tuesday, and gains continued into Wednesday trade.
On Wednesday, crude futures rose by 0.38% to $105.09 and U.S. West Texas Intermediate rose 0.55% to $101.12.
Commodities analysts at CBA attributed the gains in oil to Putin's statement, which also caused agricultural commodities to gain, as the already small risk that Black Sea supplies might normalise to any degree through mid year is likely to be zero. Corn futures rose to a one month high and wheat futures reached a three week peak.
Chinese share markets gave back their gains from Tuesday afternoon when consumer goods and tourism stocks jumped after reports that COVID 19 curbs could be loosened in some pilot areas.
The Chinese blue chips fell 0.7% and Hong Kong lost 0.2%. Customs data showed that China's exports rose 13.4% in January-March, while imports increased 7.5%.
On Wednesday, China reported 26,525 new asymptomatic coronaviruses and 1,513 symptomatic ones.
The euro was pinned to a five-week low and commodity currencies finding support as oil prices went up as a result of Putin's remarks. The Reserve Bank of New Zealand raised interest rates by a chunky 50 basis points, which resulted in an increase in the New Zealand dollar by 0.33%. It went up briefly as high as $0.6901