Asian markets down as Ukraine conflict fears escalate

Asian markets down as Ukraine conflict fears escalate
A sapper leads an armoured engineering vehicle as he checks the area around an Ukrainian army checkpoint just outside the eastern Ukrainian town of Slaviansk July 19, 2014.

HONG KONG - Asian stocks dropped Wednesday, following a sharp fall on Wall Street over fears of a market correction and concerns the conflict in Ukraine could escalate.

Analysts cited comments by Polish Foreign Minister Radoslaw Sikorski, who said Russia had increased its military presence on the Ukraine border, suggesting the situation could deteriorate.

Tokyo's Nikkei fell 1.05 per cent or 160.52 points to close at 15,159.79, Sydney dropped 0.12 per cent, or 6.6 points, to finish at 5,512.0, and Seoul shed 0.27 per cent, 5.53 points, to 2,060.73.

Hong Kong finished down 0.26 , while Shanghai slipped 0.11 per cent, or 2.48 points, to close at 2,217.47. Shenzhen rose 0.39 per cent, or 4.57 points, to end at 1,177.33.

"If Poland is indeed right that Russia is about to increase its presence in the east of Ukraine, buyers of all things risk will disappear fast as this is an indefinable outcome for markets," IG strategist Evan Lucas told Dow Jones Newswires.

CMC Markets added: "The potential of an invasion in Ukraine sent investors scurrying for the exits as they find the slightest excuse to scale off profits."

In the US, the Dow Jones Industrial Average dropped 139.81 points (0.84 per cent) to 16,429.47.

The broad-based S&P 500 fell 18.78 (0.97 per cent) to 1,920.21, while the Nasdaq Composite Index sank 31.05 (0.71 per cent) to 4,352.84.

The drop follows heavy losses at the end of July, which saw the Dow shed its gains for the year in its worst week since January, and the S&P 500 record its biggest weekly decline since mid-2012.

Market correction

Mace Blicksilver, director at Marblehead Asset Management, said of Tuesday's fall:

"It's continuing the trend from last week."

He added that some pundits have predicted a possible drop of 10 per cent or more in stocks.

US stocks have avoided a correction on this scale for more than two years.

In Tokyo, the Nikkei was also affected by a slump in shares in SoftBank - one of the biggest constituents - which fell 3.50 per cent to 6,972.0 yen (S$85.30).

The drop followed reports the Japanese carrier's US unit Sprint is ending its pursuit of rival T-Mobile due to concerns about regulatory approval.

On foreign exchange markets Wednesday, the euro was hovering near an eight-month low against the dollar in Asia on speculation that the European Central Bank (ECB) would hint at further stimulus after a policy meeting.

The euro bought US$1.3367 (S$1.67) and 137.08 yen in Tokyo afternoon trade against US$1.3369 and 137.20 yen in New York late Tuesday.

The dollar was changing hands at 102.59 yen in Tokyo trade compared with 102.62 yen in New York trade Tuesday.

In oil trade, the benchmark West Texas Intermediate (WTI) for September delivery rose 10 cents to US$97.48 while Brent crude gained US$0.25 to US$104.86 in afternoon trade.

Gold fetched US$1,293.88 an ounce by 1210 GMT compared with US$1,292.10 late Tuesday.

In other markets: - Jakarta ended down one per cent, or 50.86 points, at 5,058.23.

Car maker Astra International fell 2.24 per cent to 7,625 rupiah (S$0.80), while palm oil producer Astra Agro Lestari gained 1.43 per cent to 26,650 rupiah.

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