Most Asian markets up on Russia pledge, but traders cautious

Asian stocks rose again Wednesday as investors gave a cautious welcome to Russia's pledge to "radically" wind down military activity around two cities including Kyiv, lifting hopes for a ceasefire in the month-long Ukraine war.

The announcement, after talks between the two sides in Turkey, sparked a rally on US and European markets while sending oil prices tumbling.

Russia's Deputy Defence Minister Alexander Fomin said there was progress on "the neutrality and non-nuclear status" of Ukraine -- two central Russian concerns.

And Kyiv's negotiator David Arakhamia said there were "sufficient" conditions for President Volodymyr Zelensky and his Russian counterpart Vladimir Putin to meet in a push to end the crisis.

However, the excitement was tempered as world leaders greeted the news with scepticism, with Joe Biden saying he wanted to see if Moscow will "follow through" on a promise to de-escalate.

And the Pentagon said Putin had merely repositioned a "small number" of forces near Kyiv but could be preparing a "major offensive" elsewhere.

The strong gains on Wall Street and in Europe were largely matched in Asia, with Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Manila, Jakarta and Wellington all performing well. Tokyo bucked the trend by falling.

"It's perplexing to some extent to see that markets are reacting as strongly as they are," Alexander Rodnyansky, an adviser to Zelensky, told Bloomberg TV.

"The only thing that will bring them really to the negotiating table is the success of Ukraine on the battlefield and further economic pressure, in terms of sanctions."

And Moscow-based political analyst Evgeny Minchenko added: "I think there was very serious misunderstanding of what both sides said in Istanbul after the talks.

"So far I just heard is that there will be less action near Kyiv and Chernigiv, because the Russian army is concentrating its resources against the Ukrainian army in (the eastern region of) Donbas."

And by Tuesday evening Ukraine's general staff -- while confirming Russian units were withdrawing from the Kyiv and Chernigiv regions -- said it was most likely a troop rotation intended to "mislead" Ukraine's military.

"We're not prepared to call this a retreat or even a withdrawal," Pentagon spokesman John Kirby said, warning a "major offensive" may yet be imminent in other areas of Ukraine and that the threat to Kyiv was not over.

Oil prices edged back up in early Asian business after initially tumbling on the Russian announcement, which sent WTI briefly dipping below $100.

Speculation about a hefty drop in demand caused by a lockdown of more than 20 million people in Shanghai, China's biggest city, and hopes for progress in Iran nuclear talks were also weighing on prices.

Still, crude remains elevated on continued worries about supplies caused by the Ukraine war, while analysts said there was an expectation that OPEC and other major producers including Russia will decide against lifting output at their monthly meeting this week.

Traders will be keeping an eye on the release of US jobs data Friday, which will give a fresh snapshot of the world's top economy in light of surging inflation and the heightened uncertainty caused by war.

A strong reading could spur the Federal Reserve to act more aggressively to fight surging prices, with some commentators predicting several half-point interest rate hikes this year.

Key figures around 0230GMT 

Tokyo - Nikkei 225: DOWN 1.3% at 27,893.92 (break)

Hong Kong - Hang Seng Index: UP 1.2% at 22,192.17

Shanghai - Composite: UP 0.8% at 3,227.83

West Texas Intermediate: UP 0.8% at $105.09 per barrel

Brent North Sea crude: UP 0.9% at $111.25 per barrel

Euro/dollar: UP at $1.1108 from $1.1090 late Tuesday

Pound/dollar: UP at $1.3100 from $1.3094 

Euro/pound: UP at 84.80 pence from 84.66 pence

Dollar/yen: DOWN at 121.93 yen from 122.77 yen

New York - DOW: UP 1.0% at 35,294.19 (close)

London - FTSE 100: UP 0.9% at 7,537.25 (close)