Global markets diverge after Syria strike

LONDON: Asian and European equities diverged yesterday in a muted reaction to US-led strikes on Syria, dealers said. In late morning European deals, Frankfurt forged 0.2 percent higher and Paris turned flat, while London slid 0.3 percent on the rising pound and the faltering energy sector. The United States, Britain and France carried out attacks at the weekend on alleged chemical weapons facilities, in response to what they say was a toxic gas attack by the Russia-backed Assad regime a week before.

“Even though investors have moved past the Syria missile strikes and are working on the basis that there will be no extended conflict or market-adverse retaliation, equity markets are struggling for direction,” noted Interactive Investor analyst Rebecca O’Keeffe. “This lack of positive reaction is a potential concern and is an indication that investors are wary.”

Wary investors

Most Asian markets dipped yesterday but Tokyo eked out gains, as a US-led strike on Syrian targets fuelled fresh concerns over the tinderbox Middle East. London’s benchmark FTSE 100 index lost ground as the strong pound weighed on the share prices of multinationals earning large amounts in other currencies. The commodities-heavy FTSE was also weighed down as oil prices slid, dragging the energy sector lower with BP down 1.6 percent at 495.90 pence.

“The strike on Syrian chemical locations over the weekend marks the end of the recent standoff,” noted IG analyst Joshua Mahony. “Market realization that this attack largely draws the line under the issue has brought about a sharp decline in oil prices in early trade, hitting BP shares in particular.” The troubles in the oil-rich Middle East have helped push the price of crude to highs not seen since the end of 2014, though the market dropped yesterday. While there was broad support for the Syria mission, Moscow condemned it as illegal and warned it would provoke “chaos” in international relations.

The Syria crisis, which has seen the West’s relationship with Russia grow increasingly frosty, has encompassed other regional players including Iran, Saudi Arabia and Israel, and led to talk of a military standoff. It also comes against the backdrop of a trade dispute between the United States and China. Many fear this could hammer the global economy if the two sides push through tit-for-tat tariffs on billions of dollars’ worth of goods.

WPP tumbles

British advertising and marketing group WPP topped the FTSE fallers after chief executive Martin Sorrell resigned over the weekend. Sorrell’s departure came 10 days after WPP launched an independent probe into allegations of his personal misconduct through the misuse of company assets.

The company, widely regarded as a bellwether for the global advertising industry, saw its stock dive 5.8 percent to 1,119 pence. “WPP has been losing ground in the advertising world recently, as traditional advertising is losing out to online and social media marketing,” said CMC Markets analyst David Madden.

“Sir Martin was an integral part of WPP, and some market confidence has been lost now that he is no longer at the helm.” — AFP