By: DailyForex.com
Asian stocks fell for a second day, Wednesday, while credit risk climbed and oil rose on concern the U.S. will take military action against Syria. Jitters over a possible U.S.-led military strike knocked Asian equities to a seven-week low and pushed oil prices and safe-haven gold to multi-month highs.
The MSCI Asia Pacific Index lost 1.6 percent at 11:19 a.m. in Tokyo. Credit risk in Asia advanced to the highest in two months. The Aussie dollar slid against all its 16 major peers and Indian rupee forwards extended declines.
Tokyo's Nikkei share average (NIK:^9452) sagged 2.3 percent to a two-month low while the yen was largely steady at 97.135 to the dollar and 130.075 to the euro after climbing more than 1 percent overnight.
MSCI's broadest index of Asia-Pacific shares outside Japan shed 1 percent, hitting its lowest level since July 9 and extending the previous session's 1.2 percent drop.
Indonesian shares tumbled as much as 3.3 percent to a 14-month trough while Philippine stocks sank 5.6 percent to a nine-month low.
European Shares
European shares followed suit, closing sharply lower on Tuesday. The pan-European FTSEurofirst 300 Index provisionally closed down 1.5 percent at 1,204.76 points. The Euro Stoxx 50 volatility index rose 23.8 percent to 22.17 points, its biggest daily rise since February 4th. Spain's IBEX closed provisionally down 2.7 percent, the Italian FTSE MIB was down 2.3 percent and France's CAC 40 closed provisionally down 2.1 percent.
Overnight, U.S. stocks suffered their worst day since June, and investor nervousness was reflected in a nearly 12 percent jump on the CBOE volatility index, Wall Street's so-called fear gauge, to a two-month high. Standard & Poor’s 500 Index (SPX) futures rose 0.2 percent. The S&P GSCI Index of commodities jumped to a six-month high as West Texas Intermediate crude rose 2.2 percent.
Oil Rally
WTI rose to $111.38 a barrel, sending the S&P GSCI gauge of 24 raw materials up 1.6 percent. Oil in New York surged 2.9 percent yesterday, the most since May 2, before closing at the highest level since Feb. 2012. Gasoline futures and natural gas contracts also advanced. Brent crude prices advanced 1.8 percent to a six-month high of $116.37 a barrel, extending Tuesday's 3.3 percent surge - the biggest one-day percentage gain in nearly 10 months.