U.S. shares moved higher as energy prices rise while Asian stock markets moved lower as geopolitical tensions caused by Turkey’s downing of a Russian fighter jet in Syria creates concern over the escalation of the incident and increased violence in the Middle East.
Major U.S. benchmarks posted modest advances driven by gains in the energy sector. Surging oil prices, which have seen crude oil gain 2.7% after yesterday’s downing of the Russian fighter jet, lifted the energy sector. Despite Russia’s firm denial, Turkish reports claim that the pilot was warned ten times before it was shot down. Regardless, geopolitical tensions are rising in the Middle East as NATO, of which Turkey is a member, has convened in order to discuss further policy. After initially falling upwards of 100 points, the Dow Jones Industrial Average rose 19.51 points, or 0.1%, to trade at 17,812.19. The S&P 500 added just 2.55 points, or 0.1%, to trade at 2,089.14, and the Nasdaq Composite gained 0.33 points, effectively remaining flat at 5,102.81. Shares were lifted by the energy sector, led by Exxon Mobil (N:XOM) and Chevron (N:CVX), gaining 2% and 1.5%, respectively. The two companies were among the strongest performers under the Dow Jones 30. The concerns over increased violence in the Middle East, which is one of the most prolific regions in oil production, mostly revolve around supply problems. Despite these concerns, the market still remains in a state of over-supply, evident by continue rout in energy prices which has seen the S&P’s energy sector tumble more than 14% this year.
Asian shares stumbled, fueled by the uncertainty created by the latest geopolitical events. MSCI's index of Asia-Pacific stocks outside of Japan added 0.1% while Hong Kong, Australia and South Korea shares moved slightly lower. The Japanese Nikkei 225 fell 0.4% as the yen regained some ground against the U.S. dollar. The recent string of events, including the Paris attacks and the downing of the Russian jet have created marked concerns in Asia. Yesterday’s incident is likely the most significant clash between a NATO member and Russian forces in more than half a century. While these events’ actual financial impact is rather limited, the uncertainty created among investors proves to have a deeper and longer lasting effect on the market.
This week’s major economic data releases continue today with the release of U.S. personal spending, employment, durable goods orders and oil stock data. U.S. trade will be closed for Thanksgiving Day on Thursday. A large number of Japanese data releases are scheduled for Friday, including a number of reports regarding inflation and employment. UK GDP will be released later during the day.