Asian stocks cautious on renewed Syria worries, dollar up
Traders work on the floor of the New York Stock Exchange August 28, 2013. REUTERS-Brendan McDermid
By Ian Chua
SYDNEY | Tue Sep 3, 2013 8:30pm EDT
(Reuters) - Asian stocks faltered on Wednesday, while oil and gold held on to overnight gains after President Barack Obama clinched the backing of two key figures in Congress in his drive for limited U.S. strikes on Syria.
Investors also bought the dollar in the wake of stronger-than-expected U.S. data that bolstered views the Federal Reserve will begin to scale back its massive bond-buying program as early as this month.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.2 percent, following four days of gains. Tokyo's Nikkei .N225 slipped 0.6 percent.
"There are still uncertainties stirred by the Fed's possible trimming of its stimulus program later this month and U.S.-led military action against Syria," said Shinyoung Securities analyst Lee Kyung-soo. "It's hard to rally against such uncertainties."
Risk appetite soured somewhat after key congressional leaders John Boehner and Eric Cantor both pledged their support for military action to punish President Bashar al-Assad for his suspected use of chemical weapons against civilians.
Their stance suggested that the vote could pass in Congress when lawmakers return to Washington on September 9, CitiFX wrote in a client note.
Oil and gold rose on the news with U.S. crude at $108.38 a barrel, having jumped nearly 1 percent on Tuesday. Spot gold traded at $1,413.16 an ounce following a 1.3 percent rally overnight as investors sought safety.
In the currency market, the dollar was a big winner in the wake of the upbeat U.S. data, rising to a six-week peak against a basket of major currencies .DXY.
That dollar strength saw the euro slide to a six-week low of $1.3138, although it has since managed to edge up to $1.3170. Both the dollar and euro clung to modest gains on the yen, but could quickly lose them if geopolitical risk flared up.
Working against the yen for now, the Asahi newspaper reported that the Bank of Japan will consider further monetary easing if Prime Minister Shinzo Abe decides to raise the sales tax as planned to 8 percent from 5 percent in April.
A standout currency was the Australian dollar, which firmed broadly after the Reserve Bank of Australia (RBA) gave no clear hint that it would cut its cash rate soon, following a widely expected decision to leave it at a record low 2.5 percent.
The Aussie dollar last traded at $0.9055, having risen 0.6 percent on Wednesday. But traders said any disappointment in second quarter economic growth data due at 0130 GMT could see the Aussie come under renewed pressure.
Other data in focus on Wednesday include HSBC's survey on China's vast services sector.
On Thursday, policy decisions from major central banks including the Bank of Japan and European Central Bank will take centre stage. Neither the BOJ nor the ECB is expected to inject fresh stimulus.
(Additional reporting by Jungmin Jang in Seoul; Editing by Eric Meijer)
