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Asian stocks mixed, US futures rise as Biden considers crude reserves release amid Ukraine conflict; oil drops

US futures rose and oil dropped sharply on signs that the Biden administration is considering a massive release of crude from US reserves to combat inflation. Asia stocks were mixed.

Shares weakened in China and Hong Kong following data showing contraction in Chinese manufacturing, while Japan’s equities steadied, with the yen pulled back after two days of gains. Australia and South Korea advanced. Earlier, the S&P 500 closed lower for the first time in five days and the tech-heavy Nasdaq 100 dropped as talks between Russia and Ukraine stalled.

Reports that Washington is preparing a plan to release roughly a million barrels of oil a day helped reverse a rebound in crude. The news comes ahead of an OPEC+ supply meeting later Thursday, where the cartel is expected to stick with its strategy of a modest output boost in May.

Chinese stocks are under pressure as output data reflect the damage of renewed lockdowns in technology and factory hubs. The nation’s stocks trading in the U.S. fell for the first day in three after the Securities and Exchange Commission’s chief tamped down speculation that a deal is brewing to keep about 200 Chinese stocks from losing their listings. Meanwhile, China’s central bank vowed to boost confidence and provide more effective support to the economy.

Treasuries rallied across the curve as dip-buyers stepped in, and a portion of the curve has pulled out of a brief inversion that raised concerns about an impending recession. The dollar held a retreat.

Global stocks are on track for their worst quarter in two years amid concerns about a growth slowdown, with the war in Ukraine driving volatility in commodity markets. Investors are also unnerved by the prospect of a sharper withdrawal of stimulus, as the fastest inflation in a generation forces central banks to become more aggressive with interest-rate hikes. Markets now see a strong chance the Federal Reserve will lift rates by a half point at the May meeting.

“I don’t think it’s quite the bear market, but I would say, what is the upside of equities from here — I don’t think it’s that much,” Seema Shah, chief strategist at Principal Global Investors, said on Bloomberg TV. “But the downside risks are so great. Not only is, of course, the geopolitical crisis going on. But then you have the Fed hikes.”

Kansas City Fed President Esther George, who has been among the more hawkish Fed officials during her tenure, said she favors a “steady, deliberate” series of rate hikes. Fed Richmond Bank President Thomas Barkin said he’s open to raising rates by a half point at the next meeting, depending on how strong the U.S. economy is then.

Russia said talks with Ukraine yielded no breakthroughs and that it was regrouping forces in a push to complete the takeover of the eastern Donbas region. Germany said Russia has backed off its demand that natural gas purchases be made in rubles, with a payment mechanism being worked out.

In Europe, short-dated notes led a selloff as traders bet higher-than-expected inflation will force policy makers to end their era of negative rates.



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