Markets skittish as threat of war leaves investors cold
Global markets are wavering amid threats of imminent US military intervention in Syria, which has rattled investors. However, the prospect of war has sent oil prices to their highest levels since late 2014.
The FTSE opened five points down this morning, before rallying slightly at the start of trading. The German DAX index also dropped, slipping 20 points after opening at 12,285. Spains IBEX tumbled ten points before gaining 0.21 per cent shortly after trading began.
Asian shares were also down on Thursday. The Asia-Pacific wide MSCI index slipped 0.4 per cent while Japan's Nikkei edged down 0.1 per cent. On Wall Street overnight, the S&P 500 lost 0.55 per cent, while the tech-heavy Nasdaq dropped 0.36 per cent.
“Investors are weighing up the erratic geopolitical backdrop with high hopes for earnings growth,” said Jasper Lawler, head of research at London Capital Group. “Laying beneath the uncertainty is the question of of how much support can be expected by central banks if it all goes pear-shaped. Thats left European markets setting up for a mixed open inside a volatile sideways price range. Investors need some good results from US banks which unoffically kick off US earnings season on Friday to restore some confidence. As it happens, financial shares led the declines on Wednesday amid risks of a trade war.”
Meanwhile, Brent crude oil is still sitting above $70 (£49) per barrel, as the threat of a US military intervention in Syria looms closer. After US President Donald Trump renewed his calls for action on Syria in the wake of a chemical gas attack, Prime Minister Theresa Mayannounced she would be convening an emergency cabinet meeting to discuss the possibility of military intervention.
Andreas Georgiou, investment analyst at XM Market Reserach said: "While the US President tried to water down his remarks in subsequent tweets, the increasing risk of a standoff between two of the worlds superpowers continued to sap appetite for risk, leading investors to seek the safety of assets like gold and the yen. Gold prices in particular surged notably, coming just shy of touching their 2017 highs. Oil prices also soared reaching fresh three-year highs, seemingly on speculation that tensions could have spillover effects to other neighbouring countries and disrupt oil production."