MUMBAI, India – Asian stocks drifted on Wednesday as investors remained cautious amid uncertainty over potential conflict in Ukraine and Iraq plus new numbers showing a slowdown in Japan’s economy.
KEEPING SCORE: Japan’s Nikkei 225 was up 0.2 per cent to 15,186.10. Hong Kong’s Hang Seng shed 0.1 per cent to 24,662.88. China’s Shanghai Composite dropped 0.6 per cent to 2,207.30 and Australia’s S&P/ASX 200 fell 0.3 per cent to 5,515.20. Seoul’s Kospi added 0.6 per cent to 2,053.75.
JAPAN SLOWS: Government figures showed Japan’s economy shrank at an annual pace of 6.8 per cent in the second quarter after spending got slammed by a sales tax hike that kicked in from April. The weak figures were expected as consumers and businesses had front-loaded spending in the first quarter to beat the April 1 increase in sales tax. Economists expect spending to pick up again in coming months.
INSTABILITY JITTERS: Fears of a Russian invasion of Ukraine have faded in recent days, but worries about conflicts around the globe are likely to keep investors on edge. A convoy of more than 260 Russian trucks, reportedly packed with supplies, moved toward Russia’s border with Ukraine on Tuesday, but Kyiv said the goods would only be allowed to cross if they were inspected by the International Red Cross. Ukraine is fearful that Russia could use the move as a cover for sending troops into separatist-held territory. Investors are also watching political machinations in oil-rich Iraq. On Tuesday, that nation’s embattled prime minister, Nouri al-Maliki, tried to stay in power as Iraqi politicians and the international community rallied behind a political rival.
ANALYST TAKE: “It certainly seems to be a headline geopolitical risk driven market at the moment, as any news out of Russia, Ukraine or Iraq dictates sentiment,” said IG market strategist Stan Shamu.
WALL STREET: The Dow Jones industrial average lost 0.1 per cent to 16,560.54 on Tuesday. The Standard & Poor’s 500 fell 0.2 per cent to 1,933.75 and the Nasdaq composite fell 0.3 per cent to 4,389.25.
OIL LEAK: U.S. crude oil futures slipped 16 cents to $97.21 a barrel in electronic trading on the New York Mercantile Exchange. That followed three days of increases over concerns about the reliability of Iraqi oil production. U.S. crude is trading at a seven-month low.
CURRENCIES: The euro slipped to $1.3365 from $1.3370 late Tuesday. The dollar was steady at 102.29 yen.