Asian stocks retreat as Turkey jet strike sparks geopolitical fear, STI down 0.9%

A man walking past an electronic board showing stock information at a brokerage house in Beijing, China.
A man walking past an electronic board showing stock information at a brokerage house in Beijing, China.PHOTO: REUTERS

HONG KONG (AFP) - Asian stock markets retreated on Wednesday (Nov 25), with airlines taking a hit as dealers fret over increased geopolitical tensions following the downing of a Russian jet by Turkey.

Airline shares fell in Asia. Sydney-listed Qantas was down one per cent, Cathay Pacific in Hong Kong shed 0.9 per cent, ANA lost 1.6 per cent in Tokyo and Seoul-listed Korean Air Lines was 0.7 per cent off. Chinese flag carrier Air China was 0.5 perc ent down in Shanghai.

A rally in oil prices caused by the increased tensions also threatened carriers' bottom lines as fuel is one of an airline's biggest costs.

Both US benchmark West Texas Intermediate and European benchmark Brent surged more than a dollar on Tuesday, although it retreated slightly in Asia owing to an ongoing supply glut and weak demand.

Australian shares dipped 0.5 per cent. South Korea's Kospi lost 0.2 per cent and Hong Kong's Hang Seng dropped 0.5 per cent. Japan's Nikkei shed 0.5 per cent.

Singapore's Straits Times Index was down 0.9 per cent at 2,897.19 as of 12:05 pm.

Already delicate nerves were frayed on trading floors on Tuesday after Turkey shot down the Russian war plane on the Syrian border. The incident sent shares in Europe tumbling and oil surging on supply fears, although the black gold dipped back in Asia.

While Ankara said it struck after the jet entered its airspace, Russian President Vladimir Putin called it a "stab in the back" and warned of serious consequences. Moscow insists the plane was in Syrian territory.

The incident has ratcheted up tensions between the rival players in the Syrian war, and with NATO backing member Turkey there are fears the crisis could escalate beyond the Middle East.

"A spreading and escalation in recent terror attacks and now the downing of a Russian warplane by Turkey are raising concerns of the possible unforeseen spillover impacts of Middle East conflicts," Con Williams, a rural economist at ANZ Bank New Zealand, said in a note to clients.

"The accumulation of these events is now beginning to have an influence on global markets," he added, according to Bloomberg News.

Worries about global security and its effect on the economy were already playing on dealers' minds following the Paris attacks this month and the bombing of a Russian passenger plane in Egypt.

Meanwhile Brussels will stay at the highest security threat level for another week over fears of an imminent attack.

On Monday the US State Department warned American citizens of "increased terrorist threats" and said they should "exercise vigilance when in public places or using transportation".

In European trade, London, Frankfurt and Paris all ended in the red on Tuesday but an uptick in crude helped energy firms push Wall Street to a positive close.

The US dollar stepped back against emerging market currencies after a dip in US consumer confidence and despite an upward revision of economic growth.

The South Korean won rose 0.6 per cent, Indonesia's rupiah was 0.3 per cent up and the Malaysian ringgit jumped 0.9 per cent, helped by the uptick in oil prices.