Investors flock to haven assets after US strike on Syria

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● Markets rattled by US missile strike on Syria
● Investors switch to perceived haven assets
● Gold, yen, Treasury prices and oil move higher
● European stocks soft as S&P 500 futures slip
● Dollar index steady at 100.64 ahead of US jobs data

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Oil prices and haven assets including gold, the Japanese yen and government bonds jumped in early Asia trading, while equity gauges stumbled, after the US launched a military strike against Syria in response to a gas attack there that killed more than 70 people.

Investor sentiment turned decidedly bearish as news broke that two US navy ships in the Mediterranean had fired more than 50 Tomahawk missiles at a target inside the war-ravaged middle-east nation.

Rex Tillerson, US secretary of state, said the Trump administration no longer believed Bashar al-Assad could remain Syria’s leader and that there was “no doubt” the Syrian regime was behind this week’s poison gas attack.

The missile strike and Mr Tillerson’s comments heightened tensions with Moscow and came as investors were already displaying geopolitical nerves over the two-day summit taking place in Florida between Chinese President Xi Jinping and his US counterpart.

News of the attack rattled markets, with investors swiftly switching to defensive mode — though some of the sharpest moves had been pared by the time European traders took to their desks.

Gold is up 1 per cent to $1,264 an ounce, the highest level since the days following November’s US presidential election, but had gained by as much as 1.6 per cent. The yen is 0.2 per cent stronger at ¥‎110.54 per dollar, having initially climbed as much as 0.6 per cent.

The yield on benchmark 10-year US Treasuries are down three basis points to a four-month low of 2.31 per cent, and equivalent maturity German Bund yields are slipping 2bp to 0.24 per cent. Yields move inversely to bond prices.

What to watch

News of the US military strike is likely to be investors’ primary focus on Friday, but US non-farm payrolls data, always closely watched, are due at 13:30 BST and should give further clues on the health of the US economy.

Analysts expect the US to have added 180,000 jobs last month, down from 235,000 in February, and they tip the unemployment rate to hold steady at 4.7 per cent.
A sufficiently robust jobs report may add to the chances of the Federal Reserve raising borrowing costs again in coming months. Futures markets are currently pricing in a 67 per cent probability of a 25 basis point interest rate hike in June, according to the CBOE’s FedWatch tool.

The dollar index, a measure of the buck against a basket of its peers, is little changed at 100.65.

Commodities

Oil prices are trading at their highest in a month as investors fret about the possible disruption of middle-east supplies.

Brent crude, the international energy benchmark, is up 1.2 per cent to $55.57 a barrel, eyeing a fifth straight day of gains, while West Texas Intermediate, the main US contract, is advancing 1.3 per cent to $52.36.

Silver, an alternative haven to gold, is jumping 0.8 per cent to $18.41 an ounce.

Equities

Action across stock markets is noticeably more nuanced, with some bourses supported by strength in the shares of energy groups.

US index futures suggested in early Asian trading that the S&P 500 would fall 17 points to 2,340, but now the Wall Street stock barometer is slated to shed 6 points to 2,351.5.

The pan-European Stoxx 600 is down 0.4 per cent as a slide in copper prices puts London-listed miners come under pressure.

Japan’s benchmark Topix rose 0.65 per cent, recovering from a dip into negative territory as the stronger yen hurt exporters.

Australia’s S&P/ASX 200 added 0.1 per cent, paring an initial gain of as much as 0.6 per cent, while Hong Kong’s Hang Seng fell 0.6 per cent.

China’s Shanghai Composite inched up 0.2 per cent to a new four-month high as some profit-taking in construction shares was outweighed by gains for defence and energy groups, according to Reuters.

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