Hong Kong CNN Business  — 

Global markets are rebounding and oil prices are easing after the United States and its allies hit Russia with only a limited first wave of sanctions over what President Joe Biden described as the beginning of an “invasion” of Ukraine.

European stocks surged in early trading after the West kept its most punishing sanctions in reserve in an attempt to deter further aggression by Moscow. The FTSE 100 (UKX) added 0.6% in London, Germany’s DAX 30 (DAX) increased 1.3% and France’s CAC 40 (CAC40) surged 1.6%.

In Asia, Hong Kong’s Hang Seng (HSI) Index ended up 0.6%, after declining 2.8% on Tuesday — its biggest daily loss in five months. China’s Shanghai Composite Index rose 0.9%. Japan’s stock market was closed for a holiday.

Dow futures were up 235 points, or 0.7%. S&P 500 and Nasdaq futures were up 0.8% and 1.1% respectively.

Oil prices retreated. US crude futures dropped 0.8% to $91.14 per barrel, while Brent crude declined 0.7% to $96.15 per barrel. Both futures jumped on Tuesday as the Ukraine crisis escalated.

Biden on Tuesday laid out what he called a “first tranche” of US sanctions against Russia, including on two financial institutions, Russian sovereign debt, and Russian elites and their family members.

“This is the beginning of an invasion, and therefore this is the beginning of our response,” a senior US administration official said. “If Putin escalates further, we will escalate further using both financial sanctions and export controls, which we have yet to unveil.”

Other Western nations also announced retaliatory moves against Russia, with Germany on Tuesday halting certification of the controversial Nord Stream 2 pipeline, which was built by Gazprom to transport natural gas directly from Russia to Germany.

“Punitive measures on Russia may be deemed as less aggressive than expected and some expectations are pointing to a standstill for now,” wrote Yeap Jun Rong, a Singapore-based market strategist for IG Group, in a research note on Wednesday.

He pointed out that the “harsher” impact from the penalties may come from the sovereign debt sanctions, which effectively cut Russia off from Western financing. But the other sanctions on state-owned banks and Russian elites seemed to be deemed as “relatively modest” by markets.

“That said, the situation remains highly volatile and uncertain, and any negative news flow may potentially throw markets into turmoil,” Yeap added.

Wednesday’s uptick was in sharp contrast to the previous trading day, when global stock markets tumbled and crude oil prices surged to $99 per barrel after Russia ordered troops into parts of eastern Ukraine. The Dow closed down nearly 483 points, or 1.4%. The S&P 500 finished the day 1% lower, entering a correction — defined by a 10% drop from its most recent peak. The Nasdaq shed 1.2%.

— Kevin Liptak contributed to this report.