Asian markets took a hit, sending one major Index to a two-week low, as rising tensions in the Middle East dampened the global economic outlook. Will Asia exchange traded funds (ETFs) reflect the less optimistic outlook?

The MSCI Asia Pacific Index fell 1.4% as escalating violence in Libya swayed the optimists and Japan’s economy took a small hit, report Jonathan Burgos and Norie Kuboyama for Bloomberg. Japan’s Nikkei 225 declined 1.5% after the country reported a 1.3% drop in GDP for the fourth quarter of last year. Further risk to the Japanese economy include higher crude oil prices that could dampen capital spending and private consumption.

  • iShares MSCI All Country Asia ex Japan Index Fund (NYSEArca: AAXJ)
  • iShares MSCI Pacific Ex-Japan Index Fund (NYSEArca: EPP)
  • iShares MSCI Japan Index Fund (NYSEArca: EWJ)

The People’s Bank of China increased yields on their three-month bills for the second consecutive week, which has increased speculation that policy makers could increase benchmark rates to deter inflation, writes Shani Raja for Bloomberg. [Why Chinese Yuan ETFs Could Be Ready to Pop.]

China unexpectedly reported a $7.3 billion trade deficit, the largest in seven years, according to Bloomberg. Meanwhile, Chinese yuan forwards dropped after trade deficit news as currency traders bet on the appreciation of China’s currency against the dollar. The Shanghai Composite Index diminished a little over 1% on concerns of rising oil prices and increased inflationary pressure.

  • iShares FTSE/Xinhua China 25 Index Fund (NYSEArca: FXI)
  • SPDR S&P China ETF (NYSEArca: GXC)
  • WisdomTree Dreyfus Chinese Yuan Fund (NYSEArca: CYB)

For more information on Asia, visit our Asia category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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