Asia markets calm after short-lived Russian mutiny, Singapore stock index up 0.7%

SINGAPORE – From oil to stocks and currencies, global markets were a picture of relative calm on Monday in the wake of a geopolitical shock that challenged President Vladimir Putin’s rule in Russia.

Brent crude futures rose 1 per cent to US$74.55 a barrel and United States crude poked above US$70, recouping a little of losses made last week, as investors figured an

abortive weekend mutiny by Russian mercenaries

raised questions about stability and crude supply.

“Geopolitical risk amid internal instability in Russia has increased,” said Rystad Energy analyst Jorge Leon. “We are likely to see a marginal uptick in oil prices in the coming days, if the situation does not deteriorate.”

Asian share markets were mixed.

Australia’s ASX 200 and Hong Kong’s Hang Seng Index both dropped 0.23 per cent.

China’s Shanghai Composite Index fell 0.65 per cent in catch-up trade after the country’s financial markets reopened following a two-day holiday break. Chinese shares have been facing renewed selling pressure amid sluggish economic data and a lack of aggressive stimulus.

Singapore’s Straits Times Index was up 0.73 per cent as at 9.49am and Japan’s Nikkei share index rose 0.25 per cent, while South Korea’s Kospi index advanced 0.44 per cent.

While the events in Russia had the potential to spur investors into selling riskier assets, initial moves were modest and reflected the impact of a deal that was brokered to halt the Wagner mercenary group’s advance towards Moscow. The agreement includes dropping criminal mutiny charges against its leader Yevgeny Prigozhin and his fighters. 

“Even though the Prigozhin mutiny may not cause larger market movements directly, this could quickly change depending on how the political situation in Russia unfolds in the coming months,” Dr Erik Meyersson, chief emerging markets strategist at SEB, said in a note. “Markets will likely become more sensitive to internal political matters in Russia.”

Elsewhere, markets were already on edge about a darkening growth outlook, as China’s post-pandemic recovery stalls and global interest rates remain high, and traders were unwilling to take any new positions on the basis of Russian events.

The risk-sensitive Australian dollar was steady at US$0.6679. The euro nursed last week’s modest drop at US$1.0906 and the sterling held at US$1.2728.

“I don’t think the market can get its head around working out if there are implications,” said Mr Ray Attrill, head of foreign exchange strategy at National Australia Bank in Sydney.

“People may think that, ultimately, Putin’s grip on power is weakened here. Maybe the Ukrainians may be emboldened to be upping their counteroffensives,” he said, but without obvious progress, traders in Asia would be focused on China.

China returns from the holidays with the renminbi having dropped sharply in offshore trade, leaving investors looking to the morning’s fix of the onshore trading band for signs of the central bank’s level of comfort with the slide.

The offshore renminbi last traded at 7.21 per US dollar.

The Japanese yen, which has been on a slide as global interest rate expectations rise and Japan’s central bank stays steadfastly dovish, bounced about 0.3 per cent to 143.31 per dollar

Japan’s top currency diplomat Masato Kanda said on Monday that the authorities will respond to any excessive moves and did not rule out intervening, as happened last year. The Bank of Japan should also discuss revising its yield curve control policy at an early stage, a board member was quoted as saying at a June policy meeting, a summary of opinions released on Monday showed. REUTERS, BLOOMBERG