Asian shares took a nosedive on Wednesday, with the MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropping by 0.2 percent (almost down to a four-month low).
Shares in the market fell in the wake of geopolitical concerns as America carried out air strikes in Syria, which created a shift in Middle East alliances.
In Japan, the Tokyo Nikkei fell by 0.3 percent.
Akiko Miyazaki, director of stocks at Barclays in Tokyo, said:
“If geopolitical concerns deepen, you can’t expect Japanese markets alone to survive. The market could fall up to 10-15 percent at most.”
The air strikes in Syria have also sparked a demand for safe government debt and has reduced the yields of U.S. T Bills, which has put a stop to the dollar’s bullish trend.
The dollar fell by 0.2 percent against the yen overnight, going as low as 108.25 yen.
Narayana Kocherlakota , President of the Federal Reserve Bank of Minneapolis, recently said that the central bank can continue to stimulate the American economy (with inflation not posing much threat).
These comments were perceived by the markets perceived as somewhat dovish.
Masafumi Yamamoto, market strategist for Praevidentia Strategy in Tokyo, said:
“Fed officials will be in focus again today.. .if they do not give any hints that they are in a hurry to hike rates the dollar could lose more ground against the yen and present 109 as a ceiling,”
Commodities
Brent took another drop, down by 37 cents to $96.48 per barrel.
Gold also took a fall, by 0.1 percent, down to $1,221.60 an ounce.
Copper remains at a three month low, with three-month copper on the London Metal Exchange CMCU3 at $6,719 a tonne. It reached its lowest level in three months on Monday (at $6,707.25 a tonne).