Safe haven as­sets slide on Syria mis­sion hopes

Satur­day’s strikes marked the big­gest in­ter­ven­tion by West­ern coun­tries against Syr­ian Pres­i­dent al-As­sad

Viet Nam News - - MARKETS -

LON­DON — In­vestors shed safe­haven as­sets such as gold and gov­ern­ment bonds while oil prices plum­meted yes­ter­day on ex­pec­ta­tions that the week­end’s mis­sile at­tacks on Syria would not mark the start of greater West­ern in­volve­ment in the con­flict there.

Euro­pean shares were broadly flat, how­ever, adding to a mixed pic­ture in Asian stock mar­kets and sug­gest­ing that a de­gree of cau­tion still pre­vails.

“There is some re­lief that a di­rect con­fronta­tion be­tween the US and Rus­sia over Syria has been avoided,” said DZ Bank rate strate­gist Daniel Lenz, af­ter Rus­sian Pres­i­dent Vladimir Putin warned on Sun­day that fur­ther West­ern at­tacks in Syria would bring chaos to world af­fairs.

Satur­day’s strikes marked the big­gest in­ter­ven­tion by West­ern coun­tries against Syr­ian Pres­i­dent Bashar al-As­sad and his ally Rus­sia, which is fac­ing fur­ther eco­nomic sanc­tions over its role in the con­flict there.

The United States, Britain and France said the mis­sile strikes tar­geted Syria’s chem­i­cal weapons ca­pa­bil­i­ties and were not aimed at top­pling As­sad or in­ter­ven­ing in the civil war. US Pres­i­dent Don­ald Trump tweeted “Mis­sion ac­com­plished” af­ter the at­tack, un­der­lin­ing ex­pec­ta­tions that West­ern ac­tion would be lim­ited.

Gold prices fell a quar­ter of a per cent to US$1,341.51 an ounce while Euro­pean and US gov­ern­ment bond yields, which move in­versely to prices, rose across the board.

Yield on both Ger­man and US 10-year gov­ern­ment bonds, seen as among the most liq­uid and safe as­sets in the world, were both at their high­est level in three weeks.

Oil prices mean­while dropped sharply, with Brent crude shed­ding over 1.5 per cent to $71.45 a bar­rel, though a rise in US drilling for new pro­duc­tion also dragged on prices.

MSCI’s world eq­uity in­dex, which tracks shares in 47 coun­tries, was flat on the day and a pan-Euro­pean stock in­dex was marginally lower.

US stock fu­tures were point­ing to­wards a higher open­ing on the fa­mous Wall Street.

That mar­ket is now fo­cused on US first quar­ter earn­ings, es­pe­cially af­ter Fe­bru­ary’s sell-off and tech sec­tor woes took val­u­a­tions down to more rea­son­able lev­els, said Sal­man Ahmed, chief in­vest­ment strate­gist at Lom­bard Odier In­vest­ment Man­agers.

“If there is a gen­uine dent in earn­ings, peo­ple will sit up and take no­tice, stock and sec­tor-spe­cific is­sues are be­com­ing im­por­tant,” he said.

He added that reg­u­la­tion will also be a pow­er­ful driver for the tech sec­tor, cit­ing the ex­am­ple of Face­book, and for the bank­ing sec­tor.

The dol­lar failed to hold its early gains on the yen and eased to 107.20, though that was still up on last week’s low around 106.62.

Deal­ers were keep­ing a wary eye on Ja­panese pol­i­tics af­ter a sur­vey showed sup­port for Prime Min­is­ter Shinzo Abe had fallen to 26.7 per cent, the low­est since he took of­fice in late 2012.

Abe’s slid­ing rat­ings are rais­ing doubts about whether he can win a third three-year term as rul­ing Lib­eral Demo­cratic Party (LDP) leader in a Septem­ber vote, or if he might even re­sign be­fore the party elec­tion.

Japan’s Nikkei rose 0.3 per cent while MSCI’s broad­est in­dex of Asia-Pa­cific shares out­side Japan slipped 0.4 per cent as Chi­nese blue chips skid­ded 1.7 per cent.

The euro was a touch higher at $1.2357, while the dol­lar in­dex eased to 89.621.

Most South­east Asian shares fell yes­ter­day track­ing broader Asia, but losses were capped as an es­ca­la­tion of US-led strikes over the week­end in Syria seemed un­likely.

MSCI’s broad­est in­dex of Asia-Pa­cific shares out­side Japan fell 0.6 per cent af­ter fi­nan­cials dragged Wall Street lower on Fri­day as re­sults from big banks failed to en­thuse in­vestors.

Stocks in China and Hong Kong skid­ded more than 1 per cent yes­ter­day on wor­ries that slow­ing credit growth and tight­en­ing reg­u­la­tory re­quire­ments will start to weigh on the Chi­nese econ­omy later in the year.

The CSI300 in­dex fell 1.6 per cent to 3,808.16 points by the end of the morn­ing ses­sion, while the Shang­hai Com­pos­ite In­dex lost 1.5 per cent to 3,111.65, ex­tend­ing losses from Fri­day and sharply un­der­per­form­ing the rest of Asia.

The Hang Seng in­dex dropped 1.5 per cent to 30,355.93, while the Hong Kong China En­ter­prises In­dex lost 1.9 per cent to 12,031.73.

Real estate and fi­nan­cial firms led the de­clines in both main­land and Hong Kong mar­kets as Chi­nese au­thor­i­ties con­tinue to tighten the screws on riskier types of fi­nanc­ing in a bid to re­duce sys­temic risks. — REUTERS

An in­vestor rests near a dis­play board for stock prices at a bro­ker­age in Bei­jing, China. — Photo ex­press­

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