Syria uncertainty sinks stocks as oil prices spike
AP and AFPBANGKOK/HONG KONG--The growing likelihood of Western military action against Syria pummeled global stock markets Wednesday and sent the price of oil soaring. India's rupee, already under pressure from the country's deteriorating economic and financial situation, fell dramatically.
August 29, 2013, 12:22 am TWN
Fears that the U.S., Britain and other countries are gearing up to confront Syria over its alleged use of chemical weapons against civilians rose after Defense Secretary Chuck Hagel said the U.S. military stands ready to strike against Syria if President Barack Obama gives the order.
“Investors are sort of battening down the hatches a bit. I get the sense that this looks like a situation that is likely to be with us for a while,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “One reason the market has started to fall is that people are thinking this may not be a one-off blip that will only last a week. The stakes have been raised by the use of chemical weapons,” he said.
Britain's FTSE 100 fell 0.3 percent to 6,424.57 in early trading. Germany's DAX shed 0.6 percent to 8,197.45. France's CAC-40 fell marginally to 3,968.13. Stocks in the U.S. looked set for a slight recovery after sharp losses Tuesday. Dow Jones futures rose 0.2 percent to 14,785. S&P 500 futures rose 0.2 percent to 1,631.70.
U.S. stocks were hit by a broad sell-off Tuesday. The tensions with Syria overshadowed two positive reports on the economy. The Conference Board said its consumer confidence index rose to 81.5 in August, up from 80.3 the month before and beating expectations. Separately, a survey on home prices showed a strong rise from the year before.
Syria is not a major oil producer, but traders are worried that a showdown with the regime of President Bashar al-Assad could escalate into a regional conflict that might disrupt the flow of oil from the Middle East. Key Syrian ally Iran is a big oil producer, as is Iraq, a neighbor of both nations.
Meanwhile in Asia, Tokyo tumbled 1.51 percent, or 203.91 points, to 13,338.46 and Sydney shed 1.05 percent, or 54.0 points, to close at 5,087.2.
Seoul clawed back some early losses to end flat, edging down 1.32 points to 1,884.52.
Shanghai was off 0.11 percent, or 2.27 points, at 2,101.30 while Hong Kong ended at a five-week low, slipping 1.60 percent, or 350.12 points, to 21,524.65.
Emerging markets in Asia — already seeing selling because of the expected wind-down of the U.S. Federal Reserve's massive stimulus program — were mostly lower.
Jakarta closed 1.48 percent higher, but Kuala Lumpur was off 0.89 percent and Bangkok lost 1.41 percent.
Manila ended down 3.02 percent, or 178.93 points, at 5,738.06 as traders grew jittery before the release of economic growth data on Thursday. However, it managed to pare earlier losses that saw it down almost six percent.
Gold cost US$1,422.90 an ounce, near a three-month high, at 1100 GMT on Wednesday, up from US$1,410.75 late Tuesday.
In other markets:
— India's benchmark 30-share Sensex index rose 0.16 percent, or 28.07 points, to 17,996.15 points after earlier diving more than three percent on concerns over the impact of a vast new food program for the poor.
— Singapore closed down 0.98 percent, or 29.84 points, at 3,004.18. Real estate developer Capitaland eased 2.33 percent to SG$2.93 while oil rig maker Keppel Corp shed 0.58 percent at SG$10.23.
— Wellington gave up 0.71 percent, or 32.31 points, to 4,509.72.
Air New Zealand shed 1.44 percent to NZ$1.37, while SkyCity was off 0.76 percent at NZ$3.93 and Telecom slipped 1.79 percent to NZ$2.20.