Asia stocks down, oil buoyant as Iraq war escalates
Saturday, 14 June 2014 00:00
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Reuters: Asian stocks slid and crude oil scaled nine-month highs on Friday as escalating civil war in Iraq hit risk appetite.
The yen benefited from its safe-haven status and a decline in U.S. Treasury yields following soft U.S. data that dented economic optimism.
Sunni Islamist militants have extended their advance south towards Baghdad prompting President Barack Obama to warn of possible U.S. military intervention, while Iraqi Kurdish forces took control of the oil hub of Kirkuk amid the chaos.
Weaker-than-expected U.S. retail sales and jobless claims data released on Thursday further tempered economic optimism felt earlier in the week that had propelled Wall Street to record highs.
Taking its cue from an overnight slide in U.S. stocks, MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.4%. The index, which hit a three-year high on Monday, was still poised to scrape up 0.1% this week.
Tokyo’s Nikkei lost 0.6%, on course to end the week on a 1.3% loss.
“Geopolitical tensions in Iraq have hit risk appetites. People are concerned as developments in Iraq could have a big impact on oil prices and the U.S. market, and there could be repercussions in Japan,” said Hiromichi Tamura, chief strategist at Nomura Securities in Tokyo.
U.S. crude rose 73 cents to $107.26 a barrel, after going as high as $107.68, its highest since September. [O/R]
The dollar traded little changed at 101.79 yen , near a two-week low of 101.600 hit on Thursday. On the week, the dollar was on course to lose about 0.7% against the yen.
Focus in Asia was on the Bank of Japan Governor Haruhiko Kuroda’s take on the economy, and Chinese industrial production and retail sales data due around 0530 GMT for investors to measure the pulse of the world’s second biggest economy.
After the BOJ stood pat on monetary policy on Friday as widely expected, focus turned to whether Governor Haruhiko Kuroda will maintain his confident stance on the economy.
As for the China data: “This could have some implications on risk through Asian trade, particularly given the recent improvement we’ve been seeing in China data,” Stan Shamu, market strategist at IG in Melbourne, wrote in note to clients. “There is a good chance there could be some upside risk.”
The euro was little changed at $1.3556 , poised to end the week down nearly 0.7%, hobbled by a widening yield gap between euro zone bonds and their peers following easing by the European Central Bank earlier this month.
The pound gained over a cent overnight to five-week highs after Bank of England Governor Mark Carney said on Thursday that British interest rates could rise sooner than financial markets expect. The pound was last up 0.1 percent at $1.6944 .
In commodities, copper was up on the day but still set for its third straight weekly loss as seasonally strong demand from China passes its peak.
Three-month copper on the London Metal Exchange inched up 0.3% to $6,636.50 a ton.
Palladium and sister metal platinum bounced back from the previous session’s slide as South African producers struck a deal with the union to end a crippling five-month strike.
Palladium rose $5 an ounce to $827.00 after plunging about 4% to a three-week low of $814.70 an ounce on Thursday. Platinum added $13.50 an ounce to $1,448.00 an ounce, having fallen nearly 3% on Thursday.
