Asian stocks, FX subdued as geopolitical risks widen
Indonesian rupiah at two-week low
U.S. dollar firms on Middle East tensions
Indonesia, Malaysia stocks down 1% each
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By Roushni Nair
Oct 2 (Reuters) -Emerging Asian stocks and currencies were largely subdued on Wednesday after escalating tensions in the Middle East fuelled concerns of a broader regional conflict, prompting investors to seek refuge in safe-haven assets, including the U.S. dollar.
The Indonesian rupiah IDR= declined as much as 0.5% to its lowest level since Sept. 19, while Thailand's baht THB=TH slipped as much as 0.4%.
Equities in Jakarta .JKSE, Seoul .KS11, and Kuala Lumpur .KLSE lost more than 1% each, while shares in Singapore .STI and Manila .PSI rose marginally by 0.2% and 0.3%, respectively.
In response to Israel's actions against Tehran's Hezbollah allies in Lebanon, Iran launched a series of ballistic missiles at Israel, who in turn promised a "severe retaliation" against its adversary.
The escalation of geopolitical unrest can trigger swift downturns, especially in susceptible emerging markets, while traditionally secure assets such as the U.S. dollar often see a boost in investments.
The dollar index =USD, which measures the currency against six major peers, strengthened about 0.5% to 101.2 overnight, its largest rise since Sept. 25. A stronger-than-expected reading on U.S. job openings also supported the greenback. USD/
Other regional currencies such as the Malaysian ringgit MYR= and the Philippine peso PHP= were largely flat, last down 0.1% each. The Japanese yen JPY= lost as much as 0.4%.
"Our view is that Asian currencies will broadly rise gradually, as we anticipate the U.S. employment rate will not go up significantly and as China's stimulus impacts on markets will remain positive," Ryota ABE, an economist at SMBC said.
Following China's weekend stimulus measures, Shanghai .SSEC shares had their strongest trading day in 16 years on Monday, as global investors flocked to invest in previously downtrodden Chinese stocks.
Investors are now awaiting inflation figures from the Philippines on Friday, expecting it to determine the pace of future interest rate cuts by the Bangko Sentral ng Pilipinas (BSP).
As inflation is forecast to continue its downward trend, market expectations are mounting the BSP could further lower rates at its two remaining policy meetings this year, in October and December.
Financial markets in Taipei were shut ahead of the arrival of a weakening Typhoon Krathon. Onshore financial markets in China are closed for the rest for the week due to public holidays.
HIGHLIGHTS:
** Markets in India are closed for a public holiday
** South Korea inflation cools more than expected as rate cut talk grows
Asian currencies and stocks at 0723 GMT | ||||||
COUNTRY | FX RIC | FX DAILY % | FX YTD % | INDEX | STOCKS DAILY % | STOCKS YTD % |
Japan | JPY= | -0.33 | -2.07 | .N225 | -2.18 | 13.58 |
China | CNY=CFXS | - | +1.14 | .SSEC | - | 12.15 |
India | INR=IN | - | -0.73 | .NSEI | - | 18.71 |
Indonesia | IDR= | -0.56 | +0.75 | .JKSE | -1.42 | 3.59 |
Malaysia | MYR= | -0.14 | +10.15 | .KLSE | -1.27 | 12.42 |
Philippines | PHP= | -0.02 | -1.41 | .PSI | 0.30 | 14.77 |
S.Korea | KRW=KFTC | -0.15 | -2.34 | .KS11 | -1.22 | -3.52 |
Singapore | SGD= | +0.00 | +2.41 | .STI | 0.12 | 10.64 |
Taiwan | TWD=TP | - | -3.46 | .TWII | - | 24.87 |
Thailand | THB=TH | -0.27 | +4.60 | .SETI | -0.84 | 2.58 |
Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
Asian stock markets https://tmsnrt.rs/2zpUAr4
Reporting by Roushni Nair, Additional reporting by Sherin Sunny in Bengaluru; Editing by Jacqueline Wong and Sherry Jacob-Phillips
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