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HONG KONG (Reuters) – Asian stocks dropped and the dollar gained on Wednesday after blasts in Poland that Ukraine and Polish authorities said were caused by Russian-made missiles.
The potential for a further ratcheting up of geopolitical tensions saw MSCI’s broadest index of Asia-Pacific shares outside Japan lose 0.6%.
Australian shares fell 0.5%, while Japan’s Nikkei stock index dropped 0.76%. Hong Kong’s Hang Seng Index was flat, while China’s CSI 300 lost 0.3.%.
U.S. stock futures, the S&P 500 e-minis shed 0.4%.
NATO member Poland said on Wednesday that a Russian-made rocket killed two people in eastern Poland near Ukraine, and it summoned Russia’s ambassador to Warsaw for an explanation after Moscow denied it was responsible.
“(It) interrupted what is a far more constructive tone in markets over the last three, four days,” said Dwyfor Evans, head of Asia Pacific macro strategy at State Street (NYSE:STT) Global Markets in Hong Kong, noting there has been optimism in financial markets that U.S. inflation was cooling
U.S. President Joe Biden said the United States and its NATO allies are investigating the blast but early information suggests it may not have been caused by a missile fired from Russia.
The dollar rose against major peers, led by a 0.3% advance versus the yen. Sterling lost 0.23% while the risk-sensitive Aussie dollar weakened 0.22%. The euro was flat.
The yield on benchmark 10-year Treasury notes slipped to 3.7622% in Tokyo, compared with 3.799% at the close of U.S. trading on Tuesday. It earlier fell as low as 3.757%, matching the previous session’s intraday trough, which was the lowest level since Oct. 6.
U.S. crude ticked up 0.18% to $87.08 a barrel, bolstered by news that oil supply to Hungary via the Druzhba oil pipeline has been temporarily suspended due to a fall in pressure.
Gold was slightly lower, with spot gold trading at $1,778.08 per ounce.
