TOKYO, April 12 2018 : Asian stocks came under pressure today as the threat of imminent U.S. military action in Syria rattled investors and sent oil prices to their highest levels since late 2014 on concerns about supply.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.05 percent in early trade while Japan’s Nikkei .N225 dropped 0.4 percent.
Trump declared that missiles “will be coming” in Syria, taunting Russia for supporting Syrian President Bashar al-Assad after a suspected chemical attack on rebels. Damascus and Moscow have denied any responsibility.
His comments raised the prospect of direct conflict over Syria for the first time between the two world powers backing opposing sides in the seven-year-old civil war, which has also escalated a rivalry between Saudi Arabia and Iran.
“I don’t think we are heading into the World War Three but should there be a direct collision between the U.S. and Russia for the first time, that’s the sort of headline that would plunge stock prices,” he added.
The tension intensified in another front as Saudi Arabia said its air defense forces intercepted three ballistic missiles fired at Riyadh and other cities by Yemen’s Houthis.
Both U.S. crude and global benchmark Brent traded at the highest levels since 2014 as geopolitical concerns overshadowed a surprise buildup in U.S. crude inventories.
U.S. crude futures traded at $66.79 a barrel, having risen 7.6 percent so far this week. They have traded as high as $67.45 yesterday, a level last seen in December 2014.
Brent traded at $71.93 a barrel, having touched a high of $73.09 yesterday.
Gold stood at $1,353.10 per ounce, having climbed to $1,365.30. A break above its Jan. 25 high of $1,365.8 would take the yellow metal to a high last seen in August 2016.
In the currency markets, the yen was helped by the risk averse mood.
The dollar eased to 106.82 yen JPY=, having lost momentum after hitting a five-week high of 107.49 a week ago.
The euro EUR= traded at $1.2370, having risen for a fourth day in a row yesterday. Still, the currency has mostly been in a holding pattern since late January.
The Russian rouble steadied yesterday after two days of heavy selling due to worries about the Syrian conflict and new punitive sanctions by the United States.
It closed around 62.59 to the dollar, still down more than 7 percent so far this week.