Asian stocks retreat as Syria tension buoys gold, ringgit jumps on oil rebound

A man looking at a share prices board in Tokyo on Nov 9, 2015.
A man looking at a share prices board in Tokyo on Nov 9, 2015.PHOTO: AFP

WELLINGTON (BLOOMBERG) - Asian stocks retreated as the yen and gold maintained gains on Wednesday (Nov 25), with the standoff between Turkey and Russia over the downing of a warplane near Syria stoking concern over an increase in geopolitical tension.

Japanese shares led losses in the region as the yen held its advance versus most major peers. Haven assets benefited on Tuesday after Russian President Vladimir Putin pledged "serious consequences" for the shooting down of his country's plane by Turkey near its border with northeastern Syria.

US oil was close to US$43 a barrel with Malaysia's ringgit leading a rally in Asian emerging-market currencies after a drop in US consumer confidence hit the US dollar.

"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."

While European stocks sold off on the warplane news, the impact was more limited in the US as political analysts in Russia and Europe said a major escalation seems unlikely given the risks associated with any conflict between Russia and Turkey, a NATO member. The downing of the plane comes as Brussels remains on the highest-level terror alert amid what officials have called credible terrorist threats and after the US State Department issued a global warning for Americans. Anxiety over a divergence in US and global central bank policy as soon as next month is also keeping investors on edge.

The MSCI Asia Pacific Index slipped 0.2 per cent by 9:26 am in Tokyo, as banks and airlines led Japan's Topix index down 0.7 per cent. Industrial and consumer shares were the biggest decliners in the Asia-Pacific benchmark.

Australia's S&P/ASX 200 Index was down 0.3 per cent in a second day of declines, and the S&P/NZX 50 Index lost 0.2 per cent from a record high in Wellington. The Kospi index in Seoul swung between gains and losses.

Futures on other Asian indexes were more mixed, with those on Hong Kong's Hang Seng and Hang Seng China Enterprises gauges down at least 0.5 per cent in most recent trading. Contracts on the FTSE China A50 Index were up 0.2 per cent in Singapore.

Standard & Poor's 500 Index futures were little changed after the US measure recovered from early losses Tuesday, led higher by energy producers amid the gains in oil.

Gold for immediate delivery added 0.1 per cent to at US$1,076.53 an ounce after gaining 0.6 per cent on Tuesday amid the demand for safer investments.

US President Barack Obama and the NATO military alliance called on Russia and Turkey to deescalate tensions, saying the two countries' tussle risked undermining efforts to form a united front against Islamic State. Turkey shot down the plane near its border early Tuesday, drawing condemnation from Putin, who called the attack a "stab in the back from the accomplices of terrorism."

Copper futures resumed losses, falling 0.2 per cent to US$2.0645 a pound on the Comex. Industrial metals rallied from multi year lows last session amid speculation losses that sent nickel to its lowest price in more than a decade had gone too far.

West Texas Intermediate crude slipped 0.5 per cent to US$42.65 a barrel trading, after jumping 2.7 per cent in the previous session to bring its two-day gain to more than 6 per cent. Weighting on WTI on Wednesday was an industry report in US oil stockpiles, which estimated they expanded by 1 million barrels last week for a ninth straight weekly gain.

The Russia-Turkey tensions helped send the Bloomberg Commodity Index up 0.8 per cent on Tuesday, from close to its lowest level since 1999.