Australia

Australia shares are set to rise in line with the US as Fed Chairman Powell said he would recommend a modest rate hike in March and promised to “proceed carefully”.

ASX futures were up 70 points or 1% at 7163 as of 8.00 am AEST on Thursday, suggesting a positive start to trading.

The S&P 500 rose 1.9% on Wednesday, a day after the benchmark index fell 1.6%. The Dow Jones Industrial Average gained 596 points, or 1.8%, and the technology-focused Nasdaq Composite Index added 1.6%. The advances were broad-based, with most of the S&P 500's 11 sectors rising 1% or more.

Oil prices continued to rise overnight as Exxon Mobil joined Shell, BP and a slew of major energy consumers in cutting ties with Russia’s oil and gas sector. Brent crude oil jumped above US$110 for the first time since 2014 despite the US and other countries announcing the release of 60 million barrels of oil from emergency stockpiles.

Despite the continuing war in Ukraine and spiking oil prices, investors were focused on interest rates. Fed Chairman Jerome Powell, appearing before the House Committee on Financial Services, said he would propose a quarter-percentage point rate increase at the central bank's meeting in two weeks. That alleviated concerns on Wall Street that the central bank would raise rates by half a percentage point.

Locally, S&P/ASX 200 closed 0.3% higher at 7116.7, shrugging off early losses as data showed the country's economy grew 3.4% in the December quarter. The mid-session data strengthened a rally already underway from an early 0.8% tumble amid a weak lead from overseas stocks.

Shares of commodity companies led local gains with oil prices at multi-year highs and gold prices rising. Energy explorers Beach, Woodside and Santos added between 4.2% and 6.2%, while gold miners gained.

Iron-ore miners BHP, Rio Tinto and Fortescue put on between 3.8% and 4.7%. Australia's energy sector is up 21% so far in 2022, against a 4.4% decline for the ASX 200.

Stocks in Asia mostly fell. Japan's Nikkei 225 lost 1.7% and Hong Kong's Hang Seng Index finished down 1.8%. South Korea's Kopsi, in contrast, added 0.2%.

Turning to commodities, Gold futures eased 0.8% to $US1928.90; Brent crude rose 8.5% to $US113.89; Iron ore added 0.4% to US$145 per tonne.

US bond yields rebounded after two days of decline and 10-Year Treasury Notes rose to 1.89%, up from 1.72% a day earlier. At home, the yield on the Australian 10-year bond slipped to 2.07%. Yields rise when prices fall.

The Australian dollar was buying 72.98 US cents as of 8.00am AEST, up from the previous close of 72.51. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, eased to 90.36.

Asia

Turning to Asian markets, Chinese shares closed lower, tracking broad declines among other Asian equities markets on worries over the escalating Russia-Ukraine military conflict. "The conflict clearly shows no signs of easing, with Russia ramping up its attacks on Ukraine and adding on to concerns of further economic disruptions and more persistent pricing pressures ahead," IG said. Petrochemical stocks led the session's declines with Hengli Petrochemical ending 8.6% lower and Rongsheng Petro Chemical Co. declining 7.3%. The Shanghai Composite Index closed 0.1% lower, the Shenzhen Composite Index fell 0.6% and the ChiNext Price Index slipped 1.8%.

In Hong Kong, the Hang Seng Index fell 0.5%, tracking overnight losses in the US and European equity markets amid the escalating Russia-Ukraine military conflict. Risk-off sentiment prevailed across the broader markets, CMC Markets says. Worst performers on the HSI include Xinyi Glass sliding 4.8%, NetEase dropping 3.1% and HSBC Holdings falling 3.5%. Meanwhile, oil-related companies finished higher with CNOOC Ltd. adding 3.6% and PetroChina gaining 2.4% amid this morning's surge in crude-oil prices. The Hang Seng TECH Index was 0.3% lower.

Japanese stocks ended lower, dragged by falls in auto and financial stocks, as uncertainty continued over the war in Ukraine. Bridgestone lost 6.8% and Honda Motor dropped 4.5%, weighed by concerns about higher costs of crude and other raw materials. Dai-ichi Life Holdings shed 5.2% as the 10-year Japanese government bond yield falls 4.5 bps to 0.130%. Meanwhile, oil explorer Inpex rose 7.7% and Sumitomo Metal Mining gained 3.4%. The Nikkei Stock Average fell 1.7%.

Europe

European stocks rose on Wednesday as investors took heart from upbeat US economic data despite concerns about the ongoing Russia-Ukraine conflict. The pan-European Stoxx Europe 600 gained 0.9%

"Buyers have returned to markets Wednesday after a difficult day yesterday," IG analyst Chris Beauchamp says. "A bumper ADP [private jobs data] figure and an acknowledgement of the concerns around Ukraine and its impact on the Fed's tightening policy have helped markets to make some headway."

In London, the FTSE 100 added 1.4% despite the war in Ukraine, with oil giants such as BP and Shell rising as the price of oil continued to trade at over $100 a barrel on fears that sanctions could lead to a major disruption to energy supplies.

"The latest surge in crude came despite the International Energy Agency releasing barrels from its emergency reserves--demonstrating relative impotence in the face of the disruption to supply caused by Russia's invasion of Ukraine," AJ Bell said.

The day's top riser was Polymetal International which closed up 19%, followed by UK engineering company Rolls-Royce whose shares closed up 6.8%.

In Russia, stocks and derivatives trading was closed for a third day this week. The Russian ruble fell 0.7% against the greenback to trade at 111.25 per US dollar, versus 83 Friday.

North America

US stocks shot up, while oil prices also jumped, as investors watched for updates from Ukraine and parsed testimony on the Federal Reserve's plans to raise interest rates.

The S&P 500 rose 1.9% on Wednesday, a day after the benchmark index fell 1.6%. The Dow Jones Industrial Average gained 596 points, or 1.8%, and the technology-focused Nasdaq Composite Index added 1.6%. The advances were broad-based, with most of the S&P 500's 11 sectors rising 1% or more.

Despite the continuing war in Ukraine and spiking oil prices, investors were focused on interest rates. Fed Chairman Jerome Powell, appearing before the House Committee on Financial Services, said he would propose a quarter-percentage point rate increase at the central bank's meeting in two weeks. That alleviated concerns on Wall Street that the central bank would raise rates by half a percentage point.

Yields on benchmark 10-year Treasury notes rose to 1.862%, from 1.708% Tuesday. Yields and bond prices move in opposite directions.

Stocks have been volatile in recent days as investors have tracked escalations in the war waged by Russia in Ukraine as well as domestic news about the economy and inflation.

Investors are responding to fast-moving developments on the battlefield, a volley of Western sanctions on Moscow and major companies cutting ties with Russia. By boosting energy prices, the conflict has added to uncertainty regarding likely path of US interest-rates this year.

Wednesday's gain marked the S&P 500's sixth move of more than 1% -- in either direction -- in the past seven sessions, said Frank Cappelleri, the executive director of brokerage Instinet. Those kinds of whipsaw moves reflect a fragile market, he said.

"We haven't seen big moves like this in two years," he said, referencing the early days of the pandemic.

Since the Russian invasion, major US indexes have been relatively resilient, with both the S&P 500 and Nasdaq Composite up about 1.9%. However, soaring oil prices threaten to unleash more volatility across markets, and equities are still in an overall downswing dating back to last year, Mr. Cappelleri said.

Moreover, some of the trends in the market right now, like oil driving other assets or rising interest rates, haven't been seen in years or decades, he noted. "Very few investors have lived through a rising-rates environment," he said.

Rising oil prices pose a headache for central banks already dealing with the fastest inflation rates in decades.

Energy markets extended their rapid advance Wednesday. US crude prices surged over $110 a barrel for the first time since 2014 as refiners refused to buy Russian oil, taking a bite out of global energy supplies. US crude traded as high as $112.10 and more recently was up 7% to $110.60.

"The knock-on effects [across markets] are heavily dependent on how high oil prices get," said Craig Erlam, senior market analyst at Oanda. "If oil prices start to head to $120, we're going to start seeing a lot more talk about the economic consequences globally of these sanctions."

The energy sector was the top performer in the session. Exxon Mobil rose 1.7%, Chevron moved higher 3%, and ConocoPhillips added 1.1%. Overseas, BP PLC rose 4.8% and TotalEnergies rose 8.2%.

Energy companies stand to benefit from higher energy prices, even as they work to disentangle themselves from Russia. Exxon said this week it would halt operations at a multibillion-dollar oil and gas project in Russia and would make no further investments in the country. BP said Sunday it would exit its nearly 20% stake in Russian government-controlled oil producer Rosneft.

Financials were the second-best sector on the day, up about 2.6% and erasing about half of their losses from earlier in the week. Berkshire Hathaway was up 2.2%, JPMorgan gained 2.1%, Bank of America was up 1.6% and Wells Fargo rose 3.9%.

Among other corporate names, shares of Nordstrom jumped 38% after the retailer projected stronger-than-expected earnings this year. Hewlett Packard Enterprise raised its earnings forecast for the year, lifting shares 10%.

Prices leapt in other pockets of the energy market tied to Russia. European natural-gas prices jumped 37%. There has so far been minimal disruption to the pipeline system in Ukraine, through which about a third of Russian gas exports to Europe flow, according to analysts.

The Organization of the Petroleum Exporting Countries and its Russia-led allies agreed Wednesday to raise their collective production by another 400,000 barrels a day in April, in line with what was agreed to last year. This came after the US and other major oil-consuming nations said they would release 60 million barrels of oil from their emergency stockpiles.

The International Energy Agency said it wanted to send "a unified and strong message to global oil markets that there will be no shortfall in supplies as a result of Russia's invasion of Ukraine."

In the cryptocurrency market, bitcoin traded at around $43,662, according to CoinDesk, down 0.3%. Russia's invasion of Ukraine has driven demand for cryptocurrencies in both countries, helping drive up the price of bitcoin.