NEW YORK, April 12, 2018 (AFP) – Stock markets retreated on Wednesday as US President Donald Trump’s vow to strike Syria over its alleged use of chemical weapons made investors jittery.
“A touch of risk aversion crept into financial markets on Wednesday, as the sense of relief over easing US-China trade tensions was overshadowed by the rising geopolitical risk surrounding Syria,” FXTM analyst Lukman Otunuga said.
Briefing.com analyst Patrick O’Hare said Trump’s remarks on Syria “dialed up” a new round of “geopolitical angst.”
The US president said on Twitter that “missiles will be coming” in response to an alleged chemical attack in Syria, defying Russian warnings against a military strike.
Trump considers Syrian leader Bashar al-Assad and his Russian ally responsible, the White House said later Wednesday.
“The president holds Assad and the Russians responsible for the attack,” White House spokeswoman Sarah Sanders told reporters.
“All options are on the table,” Sanders said when asked about a potential US riposte. “Final decisions have not been made on that front.”
Major US indices finished down, with the Dow biggest loser, shedding 0.9 percent. Equity markets in London, Frankfurt and Paris also fell.
Anxiety over Syria put an end to Tuesday’s rally in global stocks after a conciliatory speech by Chinese President Xi Jinping raised hopes a US-China trade war could be averted.
– Fed upbeat on US –
Federal Reserve officials, meanwhile, viewed a possible trade war as a “downside risk,” yet still expected the US economy to grow solidly, according to minutes of the US central bank’s meeting last month.
The minutes showed that Fed officials were confident inflation will rise in the months ahead, a stance that “gave traction to the view of the central bank possibly adopting a faster pace of rate hikes this year,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.
The dollar rallied a bit against the euro and other currencies compared with the period ahead of the Fed release, although the US currency was still lower against the euro near 2100 GMT compared with Tuesday at that time.
Oil prices finished at their highest level since December 2014 on Trump’s Syria statements and after Saudi Arabia intercepted ballistic missiles fired from rebel-held Yemen and shot down two drones.
US benchmark contract West Texas Intermediate for May delivery gained $1.31 to $66.82 per barrel.
Among individual companies, Facebook was a positive standout, gaining 0.8 percent as Chief Executive Mark Zuckerberg apologized and parried lawmaker queries on data security in a second day of congressional hearings into a scandal involving user data.
– Key figures around 2100 GMT –
New York – Dow: DOWN 0.9 percent at 24,189.45 (close)
New York – S&P 500: DOWN 0.6 percent at 2,642.19 (close)
New York – Nasdaq: DOWN 0.4 percent at 7,069.03 (close)
London – FTSE 100: DOWN 0.1 percent at 7,257.14 (close)
Frankfurt – DAX 30: DOWN 0.8 percent at 12,293.97 (close)
Paris – CAC 40: DOWN 0.6 percent at 5,277.94 (close)
EURO STOXX 50: DOWN 0.5 percent at 3,420.05 (close)
Tokyo – Nikkei 225: DOWN 0.5 percent at 21,687.103 (close)
Hong Kong – Hang Seng: UP 0.6 percent at 30,897.71 (close)
Shanghai – Composite: UP 0.6 percent at 3,208.08 (close)
Euro/dollar: UP at $1.2369 from $1.2356 at 2100 GMT on Tuesday
Dollar/yen: DOWN at 106.80 yen from 107.20
Pound/dollar: UP at $1.4182 from $1.4176
Oil – Brent North Sea: UP $1.02 at $72.06 per barrel
Oil – West Texas Intermediate: UP $1.31 at $66.82 per barrel