Saturday, 31 August 2013 00:00
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Reuters: Asian stocks rose and oil prices tumbled as a possible US military strike on Syria appeared less likely, while the dollar remained steady around a three-week high against a basket of currencies after upbeat US growth data.
US intervention in Syria in response to what Western governments believe was President Bashar al-Assad’s use of chemical weapons looked set to be delayed at least until United Nations investigators report back after leaving Syria on Saturday.
On Thursday, Britain’s parliament rejected British participation in any military action against Syria, while China said there should be no rush to force UN Security Council action against Syria until the UN inspectors’ investigation is complete.
The dollar index was nearly flat at 81.933, after rising as high as 82.067 on Thursday, its highest level since 5 August. US data overnight showed the US economy grew at a quicker-than-expected annual pace of 2.5% in the second quarter. Combined with a fall in weekly jobless claims, this growth reinforced expectations that the US Federal Reserve will begin tapering its asset-buying stimulus as early as next month.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up about 0.4%, but Japan’s benchmark Nikkei stock average bucked the regional trend and gave up early gains, losing 0.7% and on track to end both the week and month lower. Against the perceived safe-haven Japanese yen, the dollar shed 0.2% to 98.16 yen, moving back toward a two-week low of 96.81 yen hit on trading platform EBS on Wednesday.
“If investors sell emerging countries’ currencies and buy safe-haven yen, it will hurt Japan’s exporters’ shares, so we may have to brace for that possibility. Concerns on Syria have not faded completely, either,” said Masanaga Kono, senior strategist at Amundi Japan.
Some market participants said they expected profit-taking ahead of the US holiday long weekend, although many investors would likely remain sidelined as the Syria situation continued to unfold.
Brent crude prices fell 0.7% to $ 114.39 a barrel after spiking to a six-month high on Wednesday on fears that any foreign military action in Syria would destabilise the Middle East, which pumps a third of the world’s oil, and would disrupt crude supply.
Gold eased 0.1% to around $ 1,409.31 an ounce, moving away from a three and a half month high hit on Wednesday as fears over Syria prompted a flight to safety.
Copper prices were up 0.5% at $ 7,187.75 a ton, after sliding for a third day on Thursday and reaching their lowest price in almost three weeks due to the stronger dollar, concerns about Syria and slightly higher inventories. But they were still on track to mark their biggest monthly gain in nearly a year.
On Wall Street on Thursday, stocks ended higher in thin volume, taking back some lost ground after their worst daily decline since June earlier this week. Over the past two sessions, the Standard & Poor’s 500 Index has gained about 0.5%, but remains down 1.5% for the week.
Looming reduction of the Fed’s quantitative easing has taken a toll on US stocks but emerging market currencies have borne the brunt. The Indian rupee plunged to a record low earlier this week as policymakers scrambled for solutions.
“There are no easy choices for the central banks but the most urgent task is to move faster than investors can repatriate capital,” strategists at Jefferies said in a note to clients. “This means making the unpalatable decision of collapsing domestic demand by raising interest rates,” they said.
On Thursday, Indonesia’s central bank raised its main interest rates, the latest country forced to defend its currency as investors pulled out funds from emerging markets in search of safer havens.
