Hong Kong: Asian markets fell sharply Wednesday, while oil prices rose and emerging market currencies sank, as the West stepped up preparations for a possible military strike on Syria.
The losses extended falls on Tuesday and followed drops on Wall Street and in Europe as investors ran for cover, while stocks and currencies in developing Asian countries came under renewed pressure.
Adding to the tensions in the Middle East are concerns about a looming row in Washington over the US debt ceiling, which could leave the country in political deadlock.
Tokyo tumbled 1.51 per cent, or 203.91 points, to 13,338.46 and Sydney shed 1.05 per cent, 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 per cent, or 2.27 points, at 2,101.30 while Hong Kong ended at a five-week low, slipping 1.60 per cent, or 350.12 points, to 21,524.65.
Emerging markets in Asia - already seeing selling because of the expected wind-down of the US Federal Reserve’s massive stimulus programme - were mostly lower.
Jakarta closed 1.48 per cent higher, but Kuala Lumpur was off 0.89 per cent and Bangkok lost 1.41 per cent.
Manila ended down 3.02 per cent, 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 per cent.
The West, led by the United States, is edging closer to a targeted strike on Syria, which is accused of carrying out a gas attack on August 21 that killed hundreds of civilians.
“We are prepared. We have moved assets in place to be able to fulfil and comply with whatever option the president wishes to take,” US Defence Secretary Chuck Hagel told the BBC on Tuesday.
The possibility of more turmoil in the oil-rich region saw crude prices extend gains.
New York’s main contract, West Texas Intermediate for delivery in October, hit an intra-day high in Asia of $112.23. Brent North Sea crude for October spiked at $117.22.
Kathy Lien, of BK Asset Management, said: “The possibility of a military strike on the country (Syria) is growing by the minute and investors are worried that it could destabilise the region.”
On Wall Street, the Dow fell 1.14 per cent, the S&P 500 lost 1.59 per cent and the Nasdaq tumbled 2.16 per cent, while Paris and Frankfurt each lost more than two per cent.
In forex trade, the dollar sat at 97.38 yen, up from 97.01 yen late in New York but well down from levels above 98.00 yen in Tokyo on Tuesday.
The euro bought $1.3348 and 129.92 yen compared with $1.3391 and 129.88 yen.
India’s rupee continued to suffer, slumping almost four per cent to 68.74 against the dollar - another record low - as fears over Syria compounded domestic economic woes and expectations the US will wind down its stimulus programme.
The Indonesian rupiah dived to 11,418 against the dollar from 10,925 rupiah, while the greenback was at 44.79 Philippine pesos from 44.43 pesos.
“The situation with Syria has been playing havoc with currency markets for the last few days,” said Kenichi Hirano, market adviser at Tachibana Securities.
“Any action by the US is not likely to be protracted. But wrangling over the national debt could go on for quite a while, as we’ve seen in the past.”
Dealers are increasingly concerned about a repeat of the 2011 debt ceiling stand-off that brought Washington close to defaulting on its repayments and preceded a downgrade of its AAA sovereign rating.
Treasury Secretary Jacob Lew said this week the $16.7 trillion limit will be reached in mid-October, raising the chances that Republicans and Democrats will engage in another game of brinkmanship.
Gold cost $1,422.90 an ounce, near a three-month high, at 1100 GMT on Wednesday, up from $1,410.75 late Tuesday.
In other markets:
- India’s benchmark 30-share Sensex index rose 0.16 per cent, or 28.07 points, to 17,996.15 points after earlier diving more than three per cent on concerns over the impact of a vast new food programme for the poor.
- Singapore closed down 0.98 per cent, or 29.84 points, at 3,004.18. Real estate developer Capitaland eased 2.33 per cent to Sg$2.93 while oil rig maker Keppel Corp shed 0.58 per cent at Sg$10.23.
- Taipei ended flat, edging up 3.70 points to 7,824.54.
Taiwan Semiconductor Manufacturing Co added 1.26 per cent to Tw$96.8 while Hon Hai Precision was 0.87 per cent lower at Tw$79.3.
- Wellington gave up 0.71 per cent, or 32.31 points, to 4,509.72.
Air New Zealand shed 1.44 per cent to NZ$1.37, while SkyCity was off 0.76 per cent at NZ$3.93 and Telecom slipped 1.79 per cent to NZ$2.20.
