Easing Tensions Around Syria Boosts Asian Markets

On most Asian exchanges, stock prices rose slightly today as investor concerns over a potential U.S. attack on Syria eased, while they were encouraged by better-than-expected U.S. economic growth data.

The MSCI Asia-Pacific index, excluding Japan, strengthened by 0.4 percent today. Meanwhile, stock prices in Australia, South Korea, and Shanghai rose by approximately 0.5 percent.

On the other hand, the Japanese Nikkei index slipped by 0.3 percent, heading towards both weekly and monthly losses.

Intervention in Syria, as a response from Western governments to what is believed to be President Bashar al-Assad’s chemical weapons attack on civilians, seems to be delayed until United Nations investigators report their findings on Saturday.

On Thursday, the British Parliament refused to grant the government approval to participate in military action against Syria, while China advocates that the UN Security Council should not be forced into action against Syria until investigators complete their inquiry.

Investors are also encouraged by revised data showing that the U.S. economy grew by 2.5 percent in the second quarter compared to the same period last year, which is above expectations and higher than the initial estimate of 1.7 percent.

This, along with positive data from the U.S. labor market, has strengthened expectations that the Fed will begin tapering its bond-buying program as early as September.

“Stock markets will be vulnerable over the next month or two to various events and risks that could cause investor nervousness,” says Shane Oliver, a strategist at AMP Capital.

Reasons that could cause nervousness include the Fed’s September meeting, negotiations over the U.S. budget, as well as concerns regarding Syria, Italy, and emerging markets.

In the currency markets, the dollar index, which shows the value of the U.S. dollar against six major world currencies, is stable around 81.93 points this morning, after reaching 82.067 points yesterday, the highest level since August 5.

Against the yen, which is considered a safe haven for capital in turbulent times, the dollar weakened by 0.2 percent to 98.16 yen.

The euro exchange rate, on the other hand, is stable around 1.3245 dollars, slightly above the two-week low of 1.3219 dollars, which it fell to on Thursday.

The price of Brent Blend crude oil fell by 0.7 percent to 114.39 dollars per barrel, after reaching a six-month high on Wednesday due to concerns that military action against Syria could destabilize the Middle East, from which a third of the world’s total oil flows.

The price of gold also slightly declined from its highest level in the last three and a half months, by 0.1 percent, to 1,409.30 dollars.