HONG KONG: Asian shares mostly edged higher on Wednesday, with three days of painful losses giving way to apparent stability, although oil prices extended gains after the United States and Britain moved to ban imports of Russian crude.
But while panic selling has eased in the market for two weeks, analysts have warned of further volatility as Russia shows no signs of easing its invasion of Ukraine.
The crisis has sparked fears that the fragile global recovery from Covid-19 will be replaced by a period of stagflation, in which inflation spikes and the economy flattens or contracts.
A key driver of the stock sell-off has been a surge in commodity prices.
Crude oil is the main concern, as Russia’s production cuts will add to an already tight market. Russia is the third largest oil producer in the world.
Wheat and metals including nickel have hit record highs.
Warnings that U.S. President Joe Biden would ban imports from Russia sent Brent crude surging to a high of $139 on Monday, about $8 below its 2008 record, before falling back.
However, the confirmation of the ban on Tuesday, and the news that the UK will join before the end of the year, has black gold roaring again.
EU countries, which get about 40 percent of their gas imports and a quarter of their oil from Russia, have opted to set a goal of reducing Russian gas imports by two-thirds.
In early Wednesday trade, the contract was around $129, while WTI was hovering around $125.
The announcement also gave a hole in Wall Street’s rally, with all three major indexes closing in the red.
However, much of Asia squeezed out some of the gains, helped by a small amount of dip-buying.
Tokyo, Shanghai, Singapore, Sydney, Taipei, Manila, Jakarta and Wellington all rose, but Hong Kong fell.