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Most Asian Stocks Wilt Under Geopolitical Weight

Most Asian Stocks Wilt Under Geopolitical Weight

David Cottle, Analyst

Talking Points

  • Asian stocks lacked confidence as geopolitical worries swirl about the Middle East and North Korea
  • The US Dollar also slipped back
  • Australian and Chinese indexes managed gains, but only modest ones. The rest were in the red

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Asian stocks were mostly lower in Tuesday’s Asian trade. Geopolitical worries continue to build and Wall Street’s lead was lackluster so gains were always a big ask.

Federal Reserve Chair Janet Yellen struck her usual cautiously upbeat note on the US economy in a speech on Monday, but failed to move the dial for markets either way.

The Nikkei ended down 0.3%, setting the general tone although Australia's ASX 200 managed gains following some generally upbeat local data and a better run for commodity prices. Shanghai stocks also rose, if only just, but mainboards in Hong Kong and Seoul were in the red as investors avoided assets perceived as riskier.

A weaker US Dollar also had its usual doleful effect on many local exporter stocks.

The greenback slipped against the Yen in Asian trading as markets continue to digest Friday’s US missile strike on Syria, and look with increasing concern to North Korea and the US Navy carrier group which is now in the area. In less beligerent news, Bank of Japan Governor Haruhiko Kuroda told the Upper House of Japan’s parliament that he believed the BoJ would be able to exit its vast quantitative easing program smoothly when the time comes.

The Australian Dollar meandered following early data showing that domestic consumers were feeling pretty good, but that business sentiment was more mixed.

Crude oil prices eased a little through the Asia-Pacific session but didn’t stray far from this week’s five-week highs. Rising worries about Syria have been somewhat offset by news of still-rising US shale oil production in a market still wondering whether traditional producers will extend output cuts agreed last year. Both international bellwether Brent and US crude were down less than ten cents a barrel. Brent has risen for six straight sessions.

Gold moved higher again, propped up by those same geopolitical concerns. Spot prices edged up about 0.2%.

The rest of Tuesday's session offers plentiful UK economic data and may therefore offer some risk to sterling bulls. There's also Germany's ZEW sentiment survey and the Job Openings and Labor Turnover Survey (JOLTS) from the US.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.