Global mar­kets diverge af­ter Syria strike

Kuwait Times - - Business -

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

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