HONG KONG, RAW – Gains in banks, energy and mining stocks have lifted Asian equities a little higher as investors brace for aggressive US rate hikes and war disrupting oil supplies.

Oil futures rose nearly three per cent to a two-week high in Asia.

The yen fell through the key 120 level against the US dollar for the first time since 2016 and Treasuries extended losses after US Federal Reserve Chairman Jerome Powell on Monday flagged a more aggressive tightening of monetary policy than previously anticipated.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2 per cent led by gains in Australia’s miner-and-bank heavy index, which hit a two-month high.

Japan’s Nikkei rose 1.7 per cent to 27,276.

“This very sharp spike in commodity prices is actually having relatively mixed impacts … because we have some notable commodity exporters in this region who would possibly stand to benefit,” Manishi Raychaudhuri, Asia-Pacific equity strategist at BNP Paribas, said.

Meanwhile, “Investors are coming to terms with the fact the developed markets’ central banks would normalise monetary policy”, he said.

Powell had sparked a bond rout overnight after he told the National Association for Business Economics the US central bank was prepared to do what it takes to combat inflation and that bigger-than-usual hikes would be deployed if needed.

Treasuries and US stock futures remained on edge, with S&P 500 futures down 0.3 per cent and rates-sensitive Nasdaq 100 futures down 0.4 per cent.

Benchmark 10-year Treasury yields hit an almost three-year high of 2.3330 per cent.

Fed funds futures are now pricing a two-third chance of a 50-basis-point rate hike in May.

The Japanese yen, also sensitive to rising US rates, fell past 120-per-US dollar briefly and last bought 119.90.

Chinese markets, on the other hand, are awaiting policy easing after it was flagged by authorities last week.

China’s blue chip index opened 0.2 per cent lower while Hong Kong’s benchmark Hang Seng Index rose 0.7 per cent.

Hong Kong shares of China Eastern Airlines fell 5.5 per cent after one of its Boeing 737-800s with 132 people on board crashed in mountains in southern China on Monday.

Meanwhile, a lack of progress in the Russia-Ukraine peace negotiations continued to weigh on sentiment.

Conflict raged on as Ukraine said it would not obey ultimatums from Russia after Moscow demanded it stop defending the besieged city of Mariupol.

Oil futures extended gains on Tuesday morning on news that some European Union members were considering imposing sanctions on Russian oil and as attacks on Saudi oil facilities sent jitters through the market.

Brent crude rose 2.9 per cent to $118.93 per barrel, while US crude ticked up 2.4 per cent to $114.85 a barrel.

The yen fell about 0.4 per cent to briefly hit 120.08 per US dollar in early Asia trade.

In other currency trade the euro was down 0.2 per cent on the day at $1.0992, having lost 2.09 per cent in a month, while the US dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was up at 98.758.

Gold was slightly lower at $1930.27 per ounce.