- Asian markets have recovered after witnessing a bloodbath last week.
Vulnerable Asian markets have turned positive this week after the turmoil seen in the final days of February. The escalation in the war between Russia and Ukraine forced market participants to shed risk-sensitive assets and park their funds in safe-haven assets.
Talks between the Kremlin and Ukraine on Monday about the ceasefire brought a new wave of risk appetite to the market. Although the negotiations ended without any result, the truce initiative was well received by the market.
Additionally, China’s upbeat Caixin Manufacturing PMI has also supported Asian markets. The indicator came in at 50.4 in February, above the previous 49.1 and market estimates of 49.3. Despite the lower economic activity in China during the Lunar New Year, when factories remain closed, Jinping’s economy has performed well.
However, the recent surge in Asian markets should be labeled a repulsive buy, not a reversal. The world is now aware of the arbitrariness of Russian President Vladimir Putin, who will not give up easily despite the mounting sanctions from Western leaders. Russia’s isolation from the international banking system SWIFT has crippled its economy by restricting its oil and energy exports.
If there is any positive development related to a ceasefire between Russia and Ukraine, the Asian markets will move higher as if there is no tomorrow. Until that happens, the odds are very high that vendors will return to the terminals soon.
Source: Fx Street
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