Investors play safe around the world as Syria tensions rise

Safety bid sends gold prices higher, bonds rally as equities decline

Nervous investors sought shelter in gold, Treasuries and the yen yesterday as tensions between the United States and Russia over Syria took centre stage after comments by US Secretary of State Rex Tillerson.

US indexes were lower while European shares reversed slight gains amid uncertainty over the looming French presidential election.

Tillerson travelled for a visit to Moscow with a unified message from world powers, denouncing Russian support for Syria, after a meeting with foreign ministers of the Group of Seven major advanced economies Along with concerns about Syria investors were also looking anxiously to France where the latest polls showed far-left candidate Jean-Luc Melenchon gaining against the rest of the pack before the first round of voting on April 23.

The pan-European STOXX 600 share index fell 0.4 per cent. MSCI’s main index of Asia-Pacific shares, excluding Japan fell 0.3 per cent. and Middle East allies. US Treasury yields fell yesterday for a second straight day as anxiety about possible US military strikes against Syria and North Korea and the outcome of the coming French election spurred demand for low-risk government debt. “Any escalation in geopolitical concerns could push us back lower in yields,” said Justin Lederer, Treasury strategist at Cantor Fitzgerald in New York.

However, yields trimmed their fall after government data that showed an increase in job openings in February.

The yield on benchmark Treasury 10-year notes was last at 2.328 per cent, down 3.3 basis points from late on Monday, while the 30-year yield was nearly 3 basis points lower at 2.959 per cent.

The Dow Jones Industrial Average fell 94.39 points, or 0.46 per cent, to 20,563.63, the S&P 500 lost 15.61 points, or 0.66 per cent, to 2,341.55 and the Nasdaq Composite dropped 52.14 points, or 0.89 per cent, to 5,828.78.

Emerging market stocks were down 0.4 per cent, on track for their fourth straight day of declines.

The dollar index, which measures the greenback against a basket of currencies, was down 0.3 per cent. The US dollar was down 0.7 per cent and the euro fell 0.5 per cent against the broadly stronger Japanese yen. The euro hit an almost five-month low versus the yen.

Gold, viewed in times of global tension as a safe place to store wealth, last traded up 1 per cent on the day at almost $1,266.96 an ounce. It hit a five-month high above $1,270 on Friday after the US missile strike.

Oil retreated from five-week highs hit earlier in the day as concerns about rising US shale production offset support from tensions in the Middle East and production cuts

Global benchmark Brent fell 0.5 per cent to $55.69. US crude was down 0.4 per cent at $52.90 per barrel.