By Chao Deng
Most Asian markets slipped Wednesday amid escalating geopolitical tensions, after Turkish military shot down a Russian jet fighter, though a rise in oil prices overnight lifted some energy shares in the region.
The Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -0.65% closed down for the first time in four days, off 0.4%, at 19,847.58, in light trading. The benchmark has risen almost 20% in less than two months.
Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +1.12% was down 0.6% at 5,193.7. Its energy sector rose 0.9%.
The Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP +1.60% rose 0.9%.
Crude oil futures /zigman2/quotes/209723602/delayed CLF26 -3.87% steadied Wednesday in Asia amid renewed concerns about a global surplus, after climbing nearly 3% overnight. Metals that sank to multiyear lows earlier in the week also surged overnight, but have pared gains in Asian trading.
On Tuesday, Turkey shot down a Russian jet fighter along the Syrian border, an incident that threatens to undercut growing efforts to create a new international coalition to confront expanding Islamic State terrorism. The Middle East is the world’s most prolific oil-producing region, though Syria itself produces very little oil.
“While the dispute between Turkey and Russia is unlikely to escalate into a hot conflict, it does underline the unresolved tensions over how to put an end to the unrest in Syria and Iraq,” said Angus Nicholson, market analyst with brokerage IG. “This uncertainty around a further escalation of the conflict in the Middle East has hung heavily over Asian markets.”
Australian energy shares gained on the oil-price moves overnight. Santos Ltd. /zigman2/quotes/207349564/delayed AU:STO +2.30% and Origin Energy Ltd. /zigman2/quotes/207944120/delayed AU:ORG -0.82% gained 3.5% and 3.1%, respectively, while AWE Ltd. rose 3.4% and Liquefied Natural Gas Ltd. advanced 7.4%.
In Hong Kong oil producers, Cnooc Ltd. /zigman2/quotes/203421416/delayed HK:883 +1.99% rose 3.4% and PetroChina Co. /zigman2/quotes/204979431/delayed HK:857 +1.16% /zigman2/quotes/206980083/delayed CN:601857 +1.17% rose 0.4%. In Japan, oil and gas developer Inpex Corp. /zigman2/quotes/206689846/delayed JP:1605 -0.67% rose 1.2%, and oil refiner Idemitsu Kosan Co. /zigman2/quotes/209216965/delayed JP:5019 +3.36% rose 2.0%.
Rising oil overnight also pressured Asian airline stocks Wednesday, with shares of Cathay Pacific Airways Ltd. /zigman2/quotes/203532437/delayed HK:293 +2.09% /zigman2/quotes/208114856/composite CPCAY +1.83% down 1.9%, Qantas Airways Ltd. /zigman2/quotes/205534063/delayed AU:QAN +1.08% down 1.6% and Japan Airlines Co. /zigman2/quotes/202202214/delayed JP:9201 -0.89% 0.9% lower.
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Asian government bonds gained, as investors sought havens assets, after a rally in U.S. Treasury yields overnight.
Australia’s benchmark 10-year government bond yield /zigman2/quotes/211347066/realtime BX:TMBMKAU-10Y +1.33% fell to 2.88% Wednesday from 2.94% a day earlier. Ten-year yields on Thailand’s government bonds /zigman2/quotes/211347034/realtime BX:AMBMKTH-10Y -3.71% dropped to 2.76% from 2.82% Tuesday. Yields fall as prices rise.
The Japanese yen /zigman2/quotes/210561789/realtime/sampled USDJPY +0.0015% , another asset sought during geopolitical uncertainty, gained 0.2% against the U.S. dollar Wednesday, at ¥122.23 a dollar. The currency reached its strongest level in more than a week in earlier trading, at ¥122.23 per U.S. dollar.