Morning Chronicle - Asian markets sink as European stocks steady, eyes on Ukraine

The downbeat mood across the world has been compounded by weak earnings from some of the world's biggest companies, while pledges of support from Beijing have largely fallen on deaf ears.

Tech firms, who rely on debt to drive growth, led a plunge in New York on fears that the Federal Reserve is at the beginning of a period of sharp rate increases aimed at taming scorching inflation.

The numerous issues around the world are acting as a massive drag on sentiment, with many worrying about the global economic outlook.

While about 80 percent of S&P 500 firms reporting so far have beat expectations, National Australia Bank's Ray Attrill said misses by high-profile names were taking the spotlight.

This came "amid deepening concerns that corporate earnings, however strong now, cannot usurp the stiffening (global) economic headwinds stemming primarily from the ongoing war in Ukraine and China’s Covid-zero policy".

China's Omicron crisis has seen officials lockdown Shanghai, the country's biggest city, while there are fears Beijing will soon follow as infections continue to rise there.

That has raised concerns about already strained supply chains and that a crucial driver of world growth is enduring a serious economic slowdown.

Asian markets tracked Wall Street down.

Tokyo, Sydney, Seoul, Singapore, Wellington, Taipei, Manila, Bangkok, Mumbai and Jakarta were all well down.

But Shanghai bounced following a report that Xi Jinping had committed to boosting infrastructure construction as a means of accelerating the economy. Hong Kong edged up slgihtly.

"Infrastructure is an important support for economic and social development," Xi said at a high-level meeting on Tuesday, according to the official Xinhua news agency.

The comments were the latest from China's top brass, who have made a series of promises in recent weeks to kickstart growth, but analysts said the key cause of worry for investors was the leaders' refusal to back away from their Covid strategy.

"The market is no longer responsive because there's no easing up of the negative in view right now," said Yang Ziyi, at Shenzhen Sinowise Investment.

"We just need to wait. We saw the same kind of numbness towards vocal support during the burst of the 2015 bubble and in 2018."

Analysts said there was a lot of uncertainty on trading floors.

"We know that sentiment is in a terrible state right now," said Lori Calvasina, of RBC Capital Markets, on Bloomberg TV.

"This is a market that’s very, very confused. There's just a real lack of conviction in anything people want to buy at this moment in time."

Oil -- which has been under pressure in recent days owing to worries about Chinese demand -- extended Tuesday's bounce as Russian energy giant Gazprom cut off gas to Bulgaria and Poland as they had not made payments in rubles, as demanded by Moscow. Analysts expect further gains in the commodity.

Crude "is supported via the escalation of geopolitical tensions with Russia starting to cut off EU gas supplies. And this is just the beginning, so oil could remain supported as the EU pulls the plug on gas supplies in a domino effect across the continent", said SPI Asset Management's Stephen Innes.

"And, of course, the offset is China lockdowns and everything that entails with the oil market desperately trying to skirt those recession storm clouds building on the horizon."

Russia's move to cut off energy to Europe has fanned concerns about the continent's economic outlook, pushing the euro to a five-year low against the dollar.

Still, markets in London, Paris and Frankfurt edged up at the open.

- Key figures at 0720 GMT -

Tokyo - Nikkei 225: DOWN 1.2 percent at 26,386.63 (close)

Hong Kong - Hang Seng Index: DOWN UP 0.1 percent at 19,959.86

Shanghai - Composite: UP 2.5 percent at 2,958.28 (close)

London - FTSE 100: UP 0.1 percent at 7,393.02

Brent North Sea crude: UP 0.6 percent at $105.58 per barrel

West Texas Intermediate: UP 0.3 percent at $102.04 per barrel

Euro/dollar: DOWN at $1.0625 from $1.0636 late on Tuesday

Pound/dollar: DOWN at $1.2569 from $1.2576

Euro/pound: DOWN at 84.52 pence from 84.55 pence

Dollar/yen: UP at 127.98 yen from 127.21 yen

New York - Dow: DOWN 2.4 percent at 33,240.18 (close)

A.Edwards--MC-UK