August 8, 2014 / 12:35 AM / 3 years ago

GLOBAL MARKETS-Asian shares tumble as Obama authorizes air strikes in Iraq

* Spreadbetters see European markets opening on the back
    * Upbeat China trade data helps pull markets up from session
    * U.S. stock futures drop, Treasury yields hit fresh
14-month low
    * BOJ holds steady, cuts views on exports and output
    * Euro close to 9-month lows after Draghi underscores
Ukraine risk

    By Lisa Twaronite
    TOKYO, Aug 8 (Reuters) - Asian shares tumbled on Friday as
investors sought out safe-haven assets on growing fears that
conflicts in Ukraine and the Middle East could sap global
growth, extending losses after U.S. President Obama authorized
air strikes in Iraq.
    Better-than-expected export growth from China pulled markets
off their lows, but failed to offset all the gloom, which was
expected to cast a long shadow over European shares. Financial
spreadbetters see Britain's FTSE 100 opening 45 points
lower, or down 0.7 percent; Germany's DAX opening 92
points lower, or down 1 percent; and France's CAC 40 
shedding 43 points at the open, or down 1 percent.
    "It seems only a short time ago that traders were talking
corrections, but now it seems only a matter of time before we
see technical bear markets" in some European bourses, " IG chief
market strategist Chris Weston wrote in a note to clients.
    Obama said in an address that he authorized targeted strikes
to protect the besieged Yazidi minority and U.S. personnel in
Iraq, after the Iraqi government requested help. 
    U.N. Secretary-General Ban Ki-moon and the United Nations
Security Council on Thursday called for the international
community to help Iraq's government and people as the country
struggles against a sweeping advance by Islamist militants.
    MSCI's broadest index of Asia-Pacific shares outside Japan
 was off its lows but was still down about 0.9
percent, on track for a weekly loss of around 1.6 percent.
Japan's Nikkei stock average plunged about 3 percent,
giving up the 15,000 level and shedding 4.8 percent for the
    U.S. crude, meanwhile, soared more than a $1 to
$98.45 a barrel, after closing at its the weakest level since
February on Wednesday. It was last up about 0.6 percent at
$97.96, while Brent crude rose 0.9 percent to $106.39 a
    "In the big scheme of things the moves feel overdone, but
that's because volatility has been so low recently. Everyone
said the volatility couldn't stay so low, that something would
change it. This seems to be the event," said Richard Grace,
chief currency and rates strategist at Commonwealth Bank of
    S&P 500 e-mini futures slipped 0.6 percent, which
could portend a downbeat day ahead on Wall Street. On Thursday,
U.S. shares ended down, erasing early gains marked on data
showing the number of Americans filing new claims for
unemployment benefits unexpectedly fell last week.  
    But markets edged away from their session lows after China
reported that its exports in July jumped 14.5 percent from a
year earlier, while imports fell 1.6 percent, leaving the
country with a trade surplus of $47.3 billion for the month.
That beat market expectations of a 7.5 percent rise in exports,
a 3 percent increase in imports and a trade surplus of $27
    Risk-averse investors continued to seek the safety of
fixed-income assets, sending U.S. yields to fresh 14-month lows
as bond prices rose.
    The yield on 10-year Treasuries stood at 2.377
percent, down from the U.S. close of 2.424 percent, after
dropping as low as 2.375 percent.    
    The yield on German Bunds slid to a record low of 1.069
percent overnight, on heightened fears that
Ukraine's conflict with pro-Russian rebels will crimp euro zone
    The European Central Bank said after its monthly
policy-setting meeting on Thursday that it stands ready to take
further easing steps to stave off deflation, and warned that the
Ukraine crisis poses a serious risk. 
    Russia said on Wednesday it will ban all U.S. food imports
and all European fruit and vegetables, in retaliation for
Western sanctions imposed for Moscow's support of the Ukraine
    A silver lining of the tensions was a weakening effect on
Europe's currency, in line with the ECB's hopes. The euro stood
close to nine-month lows against the greenback at $1.3361
, steady on the day and not far from this week's low of
$1.3333 touched on Wednesday.
    The dollar slumped about 0.3 percent against the yen to
101.75, after the Bank of Japan kept monetary policy
steady on Friday and offered a bleaker view on exports and
output after recent weak data cast doubts over its optimistic
view that the economy is steadily recovering.  
    Japan's current account swung to a deficit in June for the
first time in five months, government data showed on Friday, due
to a decline in earnings on overseas investments.
    "With the economic impact of the Ukrainian conflict now
drawing more attention and Treasury yields declining, downward
bias for the dollar is building," said Masafumi Yamamoto, market
strategist at Praevidentia Strategy in Tokyo.
    The Australian dollar slipped to a two-month low after the
Reserve Bank of Australia stuck to its stance of keeping
interest rates at a record low for some time yet. The Aussie was
down 0.2 percent at $0.9247 after falling to $0.9236,
its lowest since early June.    
    Spot gold hit $1,318.80 an ounce, its highest since
July 18, and was last up 0.4 percent on the day at $1,319.46. 

 (Additional reporting by Wayne Cole in Sydney and Shinichi
Saoshiro in Tokyo; Editing by Eric Meijer)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below