Asian Stocks Retreat as Japan Slides on Yen Amid Syria Tensions

  • Turkey's downing of Russian airplane prompts haven demand
  • Energy producers rally in Asian trading as crude rebounds

Asian stocks fell, dragged lower by Japanese shares as the yen gained after Turkey downed a Russian warplane, fueling demand for haven assets and curbing the profit outlook for exporters trading in Tokyo.

The MSCI Asia Pacific Index lost 0.2 percent to 134.27 as of 4:27 p.m. in Hong Kong. Japan’s Topix index slid for the first time in six days as the yen held gains. Russian President Vladimir Putin said the shooting down of his country’s plane by Turkish forces near their border with northeastern Syria would have “serious consequences.”

“While the dispute between Turkey and Russia is unlikely to escalate into a hot conflict, it does underline the unresolved tensions over how to put an end to the unrest in Syria and Iraq,” said Angus Nicholson, a Melbourne-based market analyst at IG Ltd. “This uncertainty around a further escalation of the conflict in the Middle East has hung heavily over Asian markets.”

While European stocks sold off on the warplane news, the impact was more limited in the U.S. 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 U.S. State Department issued a global alert for Americans.

The Asia Pacific gauge is down 2.6 percent this year, poised for its first back-to-back annual declines since 2002, as investors assess the extent of China’s economic slowdown amid preparations by the Federal Reserve to raise interest rates as early as next month.

Australia’s S&P/ASX 200 Index slipped 0.6 percent on Wednesday as consumer firms declined while energy and materials producers rallied after a two-day slide. South Korea’s Kospi index lost 0.3 percent and New Zealand’s S&P/ASX 200 Index fell 0.5 percent. Taiwan’s Taiex Index lost 0.2 percent.

Hong Kong’s Hang Seng Index dropped 0.4 percent. The Shanghai Composite advanced 0.9 percent. Volatility has fallen to an eight-month low, while individual investors borrowed money from brokerages to buy stocks as a sense of normalcy returned to the mainland market after months of turmoil.

Singapore’s Straits Times Index declined 1 percent, even after the country’s economy grew more than initially estimated in the third quarter as services helped offset a decline in manufacturing amid slowing growth in China.

Energy shares rallied across the region, leading gains on the MSCI Asia Pacific gauge. U.S. inventories probably expanded by 1 million barrels for a ninth weekly gain through Nov. 20, according to a Bloomberg survey before an Energy Information Administration report Wednesday. Cnooc Ltd. climbed 3.3 percent in Hong Kong, leading gains.

E-mini futures on the Standard & Poor’s 500 Index added 0.1 percent. The S&P 500 closed 0.1 percent higher on Tuesday.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE