Published: Tue, April 17, 2018
Business | By Tara Barton

Asia stocks mostly down after Syria strike

Asia stocks mostly down after Syria strike

The dollar was barely changed, with demand for safe-haven U.S. Treasuries ebbing as risk appetite improved in parts of the broader market and investors took the view that Western-led strikes on Syria were a one-off intervention.

China's economy grew a welcome 6.8% in the first quarter of 2018 from a year earlier, official data showed on Tuesday, unchanged from the previous quarter.

"There are two stories here, one backward-looking and one forward-looking", said Robert Subbaraman, chief economist for Asia, excluding Japan, at Nomura in Singapore.

"The more timely March data, however, point to nascent signs of a growth slowdown underway, led by these old economy sectors", Subbaraman said.

However, Tokyo ended the morning session in positive territory, while Sydney edged up 0.4 percent.

In Hong Kong, the Hang Seng index faded 492.79 points, or 1.6%, to 30,315.59, as financials and technology names took a hit.

The Dow Jones Industrial Average .DJI rose 212.9 points, or 0.87 percent, to 24,573.04, the S&P 500 .SPX gained 21.54 points, or 0.81 percent, to 2,677.84 and the Nasdaq Composite .IXIC added 49.64 points, or 0.7 percent, to 7,156.29.

Share markets started firmer in Asia on Monday amid relief US -led strikes on Syria looked like being a one-off event that avoided a direct confrontation with Russian Federation, weighing on oil prices and safe-haven Treasuries.

"The markets had been bracing for a possible escalation in Syria following President Trump's earlier warnings".

"Investors were relieved that the military action didn't expand further", said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management Co., as the strikes were limited to Syrian chemical weapons facilities and did not escalate into a direct confrontation with Russian Federation.

Asia stocks mostly down after Syria strike
Asia stocks mostly down after Syria strike

"That said, the underlying picture has not changed".

"The markets are taking the surgical strike at the heart of Syria's chemical weapon programme in their stride as traders had priced in this outcome with a high degree of probability", Stephen Innes, head of Asia-Pacific trade at OANDA, said in a note. "Geopolitics will impact the markets again".

Looking ahead, the US earnings season kicks into high gear this week with Thomson Reuters data predicting profits at S&P 500 companies increased by 18.6 percent in the first quarter from a year ago, their biggest rise in seven years.

The euro was flat at $1.2330, while the dollar index was a fraction firmer at 89.803.

The yen was at 107.14 per dollar after gaining 0.2 percent Monday.

Those declines came as the Hong Kong dollar, which is pegged to the greenback, remained close to the weak end of the currency's trading band.

The yields on German DE10YT=RR and 10-year USA government US10YT=RR bonds, among the most liquid and safe assets in the world, touched their highest levels in almost two weeks and four weeks, respectively. USA crude CLcv1 fell 1.62 percent to $66.30 per barrel and Brent LCOcv1 was last at $71.49, down 1.5 percent on the day. Treasury yields steadied and West Texas crude futures dropped below $67 a barrel.

Aluminium hovered near seven-year highs reached the previous day after US sanctions on Russian producer Rusal stirred supply concerns.

LME aluminum gained 5 percent to $2,399.00 per metric ton, the highest in more than six years.

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