Global stocks fall, oil prices soar
SYDNEY (Reuters) – Bonds, gold and the yen jumped in Asia yesterday, while stocks retreated, as investors fled to safe assets after the US launched cruise missiles against an airbase in Syria, raising the risk of confrontation with Russia and Iran.
The US dollar dropped as much as 0.6 percent, while gold and oil prices rallied hard, though the early market panic ebbed when a US official called the attack a “one-off,” with no plans for escalation.
Global benchmark Brent climbed 1.4 percent to $55.66, set to end the week up 5.4 percent
“It was a knee-jerk reaction because markets are starting to come back a little, as it doesn’t seem like there will be further retaliation coming,” said Christoffer Moltke-Leth, head of institutional client trading at Saxo Capital Markets in Singapore.
European stocks were also poised for a negative start, with financial spreadbetters expecting Britain’s FTSE 100 and France’s CAC 40 to open down 0.2 percent, and Germany’s DAX to start the day 0.3 percent lower.
US President Donald Trump ordered the strikes on Thursday against an airbase controlled by Syrian President Bashar al-Assad’s forces in retaliation for a chemical attack, launched from the base on Tuesday, that killed at least 70 people. Facing his biggest foreign policy
crisis since taking office in January, Trump took the toughest direct US action yet in Syria’s six-year-old civil war.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4 percent after earlier sliding as much as 0.85 percent to a 2-1/2-week low. The index is set to end the week down about 0.2 percent.
E-mini S&P 500 futures lost 0.3 percent, having earlier tumbled as much as 0.7 percent, in unusually sharp moves for Asian hours.
But Japan’s Nikkei reversed course to close up 0.4 percent, narrowing losses for the week to 1.3 percent.
Secretary of State Rex Tillerson noted the attack was “proportionate,” suggesting no follow-up was planned.
“The unexpected and unequivocal nature of the US response to the sarin-centric carnage in Syria by President Trump was very much in keeping with his promise not to telegraph his military options to the world in advance of taking action,” wrote Peter Kenney, senior strategist at Global Markets Advisory Group in New York.
The yen, a favored haven in times of stress, climbed across the board. The dollar moderated losses, last trading at 110.635 yen, after earlier touching 110.14, its lowest since March 28.
The dollar was otherwise steady against a basket of currencies at 100.63, as it benefited from flows into safe-haven US Treasuries.
Spot gold added 1.2 percent to $1,262.46 an ounce after earlier hitting its highest point since Nov. 10.