Monday 05:15 BST
What you need to know
- Oil edges lower as investors react to US-led strikes on Syria
- Hong Kong, China stocks fall on central bank moves, trade tensions
- Foreign exchange, sovereign debt markets steady
Oil prices fell and stocks in Japan and Australia rose, in a sign that investors were not expecting a major escalation in the conflict in Syria after the latest US-led military strikes against the Assad regime.
Syrian government forces renewed their bombing campaign against civilians following US-led strikes at the weekend against Syria’s chemical weapons capabilities, and the US vowed to impose more sanctions against Russia for supporting the regime of Syrian leader Bashar al-Assad.
But “with the benefit of some early market reaction in the currency market . . . the escalation in geopolitical tension in Syria has limited impact on overall market sentiment,” said Tai Hui, chief market strategist for Asia Pacific, JPMorgan Asset Management. “This makes sense considering the marginal impact on global economic activities.”
The S&P/ASX 200 in Sydney was up 0.3 per cent, with a fall for industrials outweighed by gains across other market segments. In Tokyo, the Topix added 0.3 per cent despite declines for energy and resources stocks in response to lower oil prices.
Hong Kong and China stocks moved lower as traders responded to central bank movements and the trade tension.
Weakness in the Hong Kong dollar and expectation of continued central bank action to underpin the currency was weighing on Hong Kong stocks, while lingering concern over the US-China trade relationship dragged down Chinese equities, said Ben Kwong, KGI Securities Hong Kong head of research.
The Hong Kong Monetary Authority intervened last week to prop up the Hong Kong dollar after it fell to HK$7.85, the bottom of its trading band and the lowest level since 2005. Analysts said further intervention could put pressure on Hong Kong’s property market.
On the mainland, the CSI 300 index of major companies listed in Shanghai and Shenzhen dropped 1.6 per cent. The financials segment of the index was down 2.8 per cent after the People’s Bank of China raised 14-day rates. But shares in companies with links to the Chinese island of Hainan popped after President Xi Jinping said the province would be developed into a pilot free-trade zone.
Forex and fixed income
Foreign exchange and sovereign debt markets were mostly steady. The dollar index, tracking the greenback against a basket of peers, was off 0.1 per cent. The Japanese yen firmed 0.1 per cent to ¥107.22 per dollar.
The Australian dollar was up 0.1 per cent at $0.7771 against its US counterpart, while the New Zealand currency was off 0.1 per cent at $0.7353.
In debt markets, yield on US-10 year Treasuries was up 1 basis point at 2.838 per cent, and the yield on the equivalent Australian note gained by the same amount to 2.740 per cent.
Rising geopolitical tension in the Middle East last week drove oil prices to their biggest weekly advance in over eight months, and their highest level since late 2014.
On Monday in Asia trading, Brent crude, the international oil benchmark, was down 1 per cent at $71.81 a barrel. West Texas Intermediate, the US marker, retreated 1 per cent to $66.75 a barrel.
“While some investors worry that further deterioration in US-Russian relationship could hurt the oil market, it should be noted that the US oil production has been quick to react to surges in oil prices,” Mr Hui said. “Moreover, Opec has the capacity to meet shortfall in supply if needed.”
Gold was up 0.2 per cent at $1,347 an ounce.
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