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- Asian stocks were on edge on Wednesday as geopolitical tensions flared after Turkey downed a Russian fighter jet, while crude oil prices extended gains. Adding to investor nervousness that followed attacks in Paris earlier this month, Turkey shot down a Russian aircraft near the Syrian border on Tuesday, saying the jet had violated its air space. It was one of the most serious publicly acknowledged clashes between a NATO member country and Russia for half a century. The individual impact on the market from events like the Paris attacks and heightened security in Brussels may be small, but there is also uncertainty that’s worrying investors. Still, some of the markets in the region managed to hold their own even as the tense backdrop kept buyers at bay. Shanghai shares edged up 0.3 percent .SSEC while Malaysian and Indonesian stocks also posted modest gains.
- The dollar nursed broad losses early on Wednesday as investors cut crowded long positions in the lead-up to the Thanksgiving holidays and amid heightened geopolitical tensions after Turkey downed a Russian warplane. It was one of the most serious publicly acknowledged clashes between a NATO member country and Russia for half a century and prompted President Vladimir Putin to warm of “serious consequences”. Investors generally shrugged off data showing the U.S. economy grew at a healthier clip in the third quarter than initially thought, an outcome that supported the case for the Federal Reserve to hike interest rates next month.
- The Australian dollar hit a one-month high of $0.7266 AUD=D4. It was already bid after Reserve Bank of Australia Governor Glenn Stevens, in a speech late on Tuesday, dampened expectations for further rate cuts. There is little in the way of major market moving data out of Asia on Wednesday. Minutes of the Bank of Japan’s last meeting are due later in the morning, but no surprises are feared.
- A few members of the Bank of Japan’s policy board said the bank’s decision to delay the timing of meeting its inflation target partly reflects slow improvement in the output gap, minutes of the Bank of Japan’s policy meeting on Oct. 30 showed. Concerns about the output gap were not shared by the majority, but they highlight a lingering worry that the BOJ’s repeated delays of it 2 percent price target belie the effectiveness to its quantitative easing. At the meeting on Oct. 30 the BOJ pushed back the timing of meeting its 2 percent price target by six months to the second half of fiscal 2016 due to weak oil prices wo board members dissented from the bank’s baseline scenario that inflation will reach 2 percent by 2017, exposing a rift between policy board members. The majority view was the delay in the price target was due to weak oil prices, the minutes showed. Many members said Japan’s inflation trend is improving as prices excluding fresh food and energy rise, the minutes showed on Wednesday. Members also said underlying inflation is improving as the number of items in the consumer price index that are rising starts to outnumber the items that are falling, the minutes showed.
- The U.S. economy grew at a healthier clip in the third quarter than initially thought, but strong inventory accumulation by businesses could temper expectations of an acceleration in growth in the final three months of the year. The Commerce Department on Tuesday said the nation’s gross domestic product grew at a 2.1 percent annual pace, not the 1.5 percent rate it reported last month, as businesses reduced an inventory bloat less aggressively than previously believed. The pace of economic growth, which was also boosted by upward revisions to business spending on equipment, suggests a resilience that could help give the Federal Reserve confidence to raise interest rates next month. While consumer spending was revised down a bit, its pace remained brisk, suggesting consumers were cash-flush.