PH, other Asian markets slump amid Syria tensions

MANILA, Philippines (UPDATED) – Asian markets, including the Philippines, fell sharply Wednesday, August 28, while oil prices rose as rising tensions in Syria added to concerns over the winding down of the US stimulus program.

The losses extended the declines on Tuesday and followed drops on Wall Street and in Europe. Emerging-market stocks and currencies also came under renewed pressure.

Tokyo tumbled 1.51%, or 203.91 points, to 13,338.46 as the dollar eased against the yen and Sydney shed 1.05%, 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%, or 2.27 points, at 2,101.30 while in the afternoon Hong Kong was down 1.68%.

PH down ahead of GDP release

Emerging markets in Asia – already seeing selling because of the expected wind-down of the US Federal Reserve’s massive stimulus program – were also suffering.

The Philippines plunged 3.88% to 5,738.06, wiping its gains for the year. Traders grew jittery ahead of the release of the country’s 2nd-quarter economic growth data on Thursday, August 29.

Jakarta was down 2.28%, Kuala Lumpur was off 1.42% and Mumbai slipped 1.82%.

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 fulfill and comply with whatever option the president wishes to take,” US Defense Secretary Chuck Hagel told the BBC on Tuesday.

Oil prices rise

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, jumped $2.95 to $111.96 a barrel in afternoon Asian trade. The contract hit an intra-day high of $112.23.

Brent North Sea crude for October was up $2.81 at $117.17 after peaking 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%, the S&P 500 lost 1.59% and the Nasdaq tumbled 2.16%, while Paris and Frankfurt each lost more than two percent.

Emerging market currencies fall, too

In forex trade, the dollar sat at 97.25 yen in Asia on Wednesday, up from 97.01 yen late in New York but well down from levels above 98.00 yen in Tokyo Tuesday.

The euro bought $1.3381 and 130.21 yen compared with $1.3391 and 129.88 yen.

India’s rupee continued to suffer, slumping almost 4% 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 program.

The unit later picked up slightly to 68.45.

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 $1,424.10 an ounce, near a three-month high, at 0700 GMT on Tuesday, up from $1,410.75 late Tuesday. – Rappler.com