European equities rebound, Asia retreats

LONDON: Europe’s main stock markets rebounded yesterday from the previous day’s losses, but spiking geopolitical tensions continued to dominate investor sentiment. The region’s equities had fallen Tuesday with airlines and hotel groups hit by a US travel warning and the downing of a Russian jet by Turkey.

Asian markets retreated yesterday, also mirroring a sell-off in tourism-linked firms in the United States overnight. The incident also sent oil prices up on concern about supplies in the crude-rich Middle East region.

“European equities are positive this morning, having fully rebounded from their geopolitical tension-fuelled lows of yesterday after Turkey shot down a Russian military jet on the Turko Syrian border, heightening worries about the region even further,” said Accendo Markets analyst Mike van Dulken.

At about 1130 GMT, London’s benchmark FTSE 100 index added 0.9 pecent, boosted ahead of a British government budget update. In the eurozone, Frankfurt’s DAX 30 won 1.4 percent, the Paris CAC 40 index was also up 1.4 percent compared with Tuesday’s close, while Milan gained 1.1 percent.

In foreign exchange activity, the euro nudged down to $1.0604. European markets rose “after the escalation of tensions between Russia and Turkey proved short-lived”, noted Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.

Delight for homebuilders

British homebuilders topped the FTSE 100 risers’ board. The sector won a major boost as finance minister George Osborne prepared to unveil a scheme to build 400,000 new homes deemed by the government to be affordable.

The plan will form part of Osborne’s latest autumn statement, or budget update, which will be delivered before parliament at 1230 GMT.

Ahead of the update, homebuilders Taylor Wimpey and Persimmon surged by more than six percent in value. Meanwhile, the Russia-Turkey incident has ratcheted up tensions between the rival players in the Syrian war, and with NATO backing its member Turkey there are fears the crisis could escalate beyond the Middle East. “A spreading and escalation in recent terror attacks and now the downing of a Russian warplane by Turkey are raising concerns of the possible unforeseen spillover impacts of Middle East conflicts,” Con Williams, a rural economist at ANZ Bank New Zealand, said in a note to clients.

“The accumulation of these events is now beginning to have an influence on global markets,” he added, according to Bloomberg News.

Worries about global security and its effect on the economy were already playing on deal- ers’ minds following the Paris attacks this month and the bombing of a Russian passenger plane in Egypt.

The losses tracked a sell-off in tourism-linked firms in the United States and Europe as already delicate nerves were frayed on trading floors after Turkey shot down the Russian warplane on the Syrian border. The incident also sent oil prices up on concern about supplies. While Ankara said it acted after the jet entered its airspace, Russian President Vladimir Putin called it a “stab in the back” and warned of serious consequences. Moscow insists the plane was in Syrian territory.

The incident has ratcheted up tensions between the rival players in the Syrian war, and with NATO backing its member Turkey there are fears the crisis could escalate beyond the Middle East.

“A spreading and escalation in recent terror attacks and now the downing of a Russian warplane by Turkey are raising concerns of the possible unforeseen spillover impacts of Middle East conflicts,” Con Williams, a rural economist at ANZ Bank New Zealand, said in a note to clients.

“The accumulation of these events is now beginning to have an influence on global markets,” he added, according to Bloomberg News. Worries about global security and its effect on the economy were already playing on dealers’ minds following the Paris attacks this month and the bombing of a Russian passenger plane in Egypt.

The city of Brussels will stay at the highest security threat level for another week over fears of an imminent attack. ‘Increased terrorist threats’ On Monday Washington issued a world travel alert, warning Americans of “increased terrorist threats” and saying they should “exercise vigilance when in public places or using transportation”.

Airline shares fell in Asia. Sydney-listed Qantas was down 1.6 percent, Cathay Pacific in Hong Kong shed two percent, ANA lost 1.7 percent in Tokyo and Seoul-listed Korean Air Lines was 0.7 percent off.

The losses came after a sell-off in travel firms during New York and European trade. Expedia, Trip-Advisor and United Continental sank in the US, while Lufthansa and British Airways’s parent IAG fell in Europe. London, Frankfurt and Paris all ended in the red but edged higher in early trade yesterday. Wall Street enjoyed a positive close, as energy firms were boosted by an uptick in crude prices. Both US benchmark West Texas Intermediate and European benchmark Brent surged more than a dollar Tuesday. However, they reversed slightly in Asia, with WTI down 0.5 percent and Brent dipping 0.3 percent. Among Asian stock markets, Tokyo, Sydney and Hong Kong were down, but Shanghai ended higher for a second straight day. The dollar stepped back against emerging-market currencies after a dip in US consumer confidence and despite an upward revision of economic growth.

The South Korean won rose 0.9 percent, Indonesia’s rupiah was 0.2 percent up and the Malaysian ringgit jumped 0.9 percent, helped by the uptick in oil prices. The Australian, Singapore and Taiwan dollars also advanced.