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Asia Pacific Shares Mixed on Middle East Turmoil; Australian Shares Rise on Aussie Dollar Plunge

James Hyerczyk

The major Asia Pacific stock indexes are trading mixed on Friday as investors assess the impact of an escalation of tensions in the Middle East. Prices were volatile in early trading after Iraqi TV reported Friday that an Iranian military commander was killed in a Bagdad airstrike. The Pentagon later confirmed that he was killed by a U.S. drone strike.

His death is a potential turning point in the Middle East and is expected to draw severe retaliation from Iran and the forces it backs in the Middle East against Israel and American interests.

At 06:27 GMT, Japan’s Nikkei 225 Index is trading 23656.62, down 181.10 or -0.76%. Hong Kong’s Hang Seng Index is at 28454.03, down 89.49 or -0.31% and South Korea’s KOSPI Index is trading 2173.44, down 1.73 or -0.08%.

China’s Shanghai Index is trading 3033.03, up 2.83 or +0.09% and Australia’s ASX/200 Index closed at 6733.50, up 42.90 or +0.64%.

Will There Be Retaliation?

The big question for investors is will there be retaliation from Iran? Even before the U.S. attack, the Pentagon said Iran had been planning attacks on U.S. interests in the Middle East. Crude oil prices jumped early Friday as speculators bet on a possible disruption in oil supply from the region.

“It remains very unclear exactly what impact (the U.S. strikes) could have on the equity market,” said Tapas Strickland, director of economics and markets at National Australia Bank.

“It is significant that one of Iran’s top military generals was reported to have been taken out … but it all hinges on what Iran does in terms of retaliation,” he said.

South Korean Market Whipsaws

South Korean stocks added over 1% right off the opening on Friday, recouping their losses in the previous session, as investors cheered Wall Street’s record highs and pinned their hopes on chipmakers’ business recovery.

However, these gains were erased after the news of the U.S. airstrikes in the Middle East hit the market, causing the KOSPI to drop more than 1% into the close.

Australian Shares Rise on China Policy Easing

Australian Shares rose over 1% on Friday, tracking gains on Wall Street as investors cheered China’s policy easing move and a private survey showing solid growth in production last month. Despite today’s solid gains, the benchmark S&P/ASX 200 Index was down about 1% for the week, heading for its biggest weekly drop since the week-ended December 6.

Aussie shares may have also been boosted by a drop in the Australian Dollar. This came as a relief to the Reserve Bank of Australia (RBA) who feared the strengthening currency would have a negative impact on exports and thus economic growth.

This article was originally posted on FX Empire

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