HONG KONG: Asian stocks slipped on Monday as increased geopolitical risks prompted investors to favor safe-haven bets such as government debt while the greenback was supported by Federal Reserve policy tightening expectations. The rise in risks of a conflict contrasts with market watchers’ outlook for the global economy, which is perhaps the most optimistic it has been in years, with Chinese data this week expected to show the economy performing well. Top aides to U.S. President Donald Trump differed on Sunday on where U.S. policy on Syria was headed after last week’s attack on a Syrian air base, while U.S. Secretary of State Rex Tillerson warned the strikes were a warning to other nations, including North Korea. “The geopolitical risks will continue to hold markets back this week though there be some opportunities for individual stock or sector plays,” said Alex Wong, a fund manager at Ample Capital Ltd. in Hong Kong, with about $130 million in assets.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell for a third consecutive session, heading back towards a three-week low tested on Friday. A U.S. Navy strike group will be moving toward the western Pacific Ocean near the Korean peninsula as a show of force, a U.S. official told Reuters on Saturday, as concerns grow about North Korea’s advancing weapons program. Korean stocks led regional losers with the main index falling to its lowest levels since mid-March as foreigners sold stocks for a sixth consecutive session. Hong Kong bucked the regional weakness, due to strength in property stocks and financial counters. Australian shares were also stronger, up 0.7 percent at a near two-year high as higher oil and metal prices propped up commodity plays. “The risks of a conflict have certainly grown and that should keep the dollar supported against most Asian currencies with hawkish comments from the U.S. central bank also helping,” said Gao Qi, an FX strategist at Scotiabank in Singapore. Economic data also offered little support with major U.S. indexes closing lower in choppy trade after a key jobs report on Friday showed the economy added 98,000 jobs in March, the fewest since last May and well below economists’ expectation of 180,000.
