Stocks in Japan and Hong Kong slipped as investors nervously awaited for the West’s response to Crimea’s vote to break away from Ukraine and join Russia, which has drawn international condemnation.
Stock markets across Asia Pacific were mixed after the referendum Sunday in Crimea, the latest development in the volatile region, amid rising worries over another possible military incursion into Ukraine by Russia. Tensions there have weighed on global markets in recent weeks.
“A further escalation of military tensions would lead to more risk-averse trading,” said Osao Iizuka, head of foreign-exchange trading at Sumitomo Mitsui Trust Bank.
The yen, which money managers typically buy when global political tensions rise, touched 101.15 per dollar, the strongest the Japanese currency has been since Feb. 5. But the dollar later picked up and was last at ¥101.45, compared with ¥101.35 late Friday in New York.
The euro was at $1.3906, largely unchanged from $1.3912. Some analysts expect the West’s threatened sanctions against Russia would mean financial assets to flow into euro-denominated assets.
“We’ve anticipated the results of the referendum. The key is what sanctions the U.S. and the Europe will carry out and how Russia will respond to them,” said Masaru Ishibashi, head of the currency trading group at Sumitomo Mitsui Banking Corp.
Japan’s Nikkei lost 0.4%, while Australia’s benchmark S&P ASX 200 shed 0.2% and South Korea’s Kospi gained less than 0.2%. In China, the Hang Seng Index in Hong Kong lost 0.4% and the Shanghai Composite was flat.
In commodities, spot gold rose as much as 0.7% in early Asian trade and was last flat at $1,381.60 an ounce. Nymex natural gas futures added 1.4% to $4.49 per British thermal unit due to supply concerns. Europe gets around 30% of its gas from Russia.
The market reaction will “depend on what the analysts believe the next steps will be,” said Quincy Krosby, a market strategist with Prudential Financial, adding she will watch banking stocks, U.S. Treasurys and gold futures closely.
Stocks have already been uneasy ahead of the Sunday vote, with the S&P 500 index last week logging its biggest weekly loss since January. Treasurys were little changed in Asian trade. The benchmark 10-year Treasury yield was at 2.642%, compared with 2.645% at Friday’s close in New York.
Headlines are expected to continue to move markets throughout the week, analysts said. Concerns over the health of the Chinese economy and the standoff in Ukraine last week sent the broad MSCI AC Asia ex Japan 2.7% lower, its worst weekly performance since August last year.
Foreign-exchange markets were also looking at China after the People’s Bank of China said over the weekend that it has decided to widen the yuan’s daily trading band, allowing it to move up or down by 2% from the daily rate set by the central bank.
On Monday, the yuan weakened to 6.1618 to the dollar, compared with 6.1502 on Friday’s close.
Source : Marketwatch