HONG KONG, Nov 16 (Reuters) – Asian stocks fell and the dollar appreciated on Wednesday after an explosion in Poland that Ukrainian and Polish authorities said was caused by a Russian-made missile.
Concerns over a possible spike in geopolitical tensions drove MSCI’s broadest index of Asia-Pacific stocks outside Japan down 1% (.MIAPJ0000PUS).
Hong Kong Hang Seng Index (.HSI) lost 1.1% and the Chinese CSI 300 (.CSI300) fell 0.4% at the lunch break. Ailing real estate sector weighed on markets, China new house prices falling at its fastest pace in more than seven years in October, weighed down by COVID 19 restrictions and industry-wide issues.
US equity futures, the S&P 500 e-minis, fell 0.2%.
In early European trading, pan-regional Euro Stoxx 50 futures lost 0.9%, German DAX futures fell 1% and FTSE futures fell 0.5%.
NATO member Poland said on Wednesday that a Russian-made rocket killed two people in eastern Poland near Ukraine, and he summoned the Russian ambassador to Warsaw for an explanation after Moscow denied responsibility.
“(It) interrupted what is a much more constructive tone in the markets over the last three or four days,” said Dwyfor Evans, head of Asia-Pacific macro strategy at State Street Global Markets in Hong Kong, who noted optimism in financial markets that US inflation was slowing.
US President Joe Biden has said the United States and its NATO allies are investigating the explosion but early information suggested it may not have been caused by a missile fired from Russia.
“I think President Biden’s comment was clear in that he was representing the US government,” said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina.
“Unless there is evidence to the contrary, (market concerns) should dissipate.”
The safe-haven US dollar pared gains against its major peers but remained mostly higher, led by a 0.63% gain against the yen .
The British pound lost 0.32%, while the risk-sensitive Australian dollar weakened 0.34%. The euro was flat.
“A lot of headlines are in the headlines today, but there is a feeling that it is not going to, at this stage (…) lead to an escalation of tensions, or at least there is no appetite for it. going in that direction,” Rodrigo said. Catril, senior currency analyst at National Australia Bank in Sydney.
The fact that the risk-sensitive and growth-friendly Australian and New Zealand dollars held onto most of their strong gains from Tuesday, following weak US PPI readings, is an indication that “there is a lot of appetite to drive down the US dollar.” said Catril.
The yield on benchmark 10-year Treasuries rose to 3.8068% in Tokyo from 3.799% at the close of U.S. markets on Tuesday. It fell earlier to 3.757%, matching the intraday low of the previous session, which was the lowest since Oct. 6.
U.S. crude fell 0.74% to $86.29 a barrel. Oil prices rose on Tuesday after the announcement that oil supply to Hungary via the Druzhba pipeline had been temporarily suspended due to a drop in pressure.
Gold was slightly lower, with spot gold trading at $1,778.17 an ounce.
Reporting by Xie Yu; Additional reporting by Ankur Banerjee; Editing by Edwina Gibbs and Edmund Klamann
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