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Global Stocks Skid, Safe-haven Assets Jump as US Strikes Syria

Stocks slumped and safe haven bonds and the yen jumped in Asia on Friday after the United States launched cruise missiles against an airbase in Syria, potentially escalating the conflict and spooking investors globally.

Reuters

Updated:April 7, 2017, 9:03 AM IST
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Global Stocks Skid, Safe-haven Assets Jump as US Strikes Syria
Visitors looks at an electronic board showing the Japan's Nikkei average at the Tokyo Stock Exchange (File Photo: REUTERS)
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Sydney: Stocks slumped and safe haven bonds and the yen jumped in Asia on Friday after the United States launched cruise missiles against an air base in Syria, potentially escalating the conflict and spooking investors globally.

The response was immediate with the US dollar dropping over half a yen in currency markets, while sovereign bonds, gold and oil prices rallied hard.

MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.5 percent in short order, and S&P 500 futures lost 0.3 percent.

The US military launched cruise missile strikes ordered by President Donald Trump against a Syrian air base controlled by President Bashar al-Assad's forces in response to a deadly chemical attack in a rebel-held area, a US official said.

Also Read: 60 US Missiles Blast Syrian Airbase Used to Launch Chemical Attack

Facing his biggest foreign policy crisis since taking office in January, Trump took the toughest direct US action yet in Syria's six-year-old civil war, raising the risk of confrontation with Russia and Iran, Assad's two main military backers.

Investors had already been on edge as Trump met Chinese leader Xi Jinping for talks over flashpoints such as North Korea and China's huge trade surplus with the United States.

"While President Trump had flagged a response to this week's chemical attack in Syria, the swiftness of the response and the willingness to take action halfway through the Trump-Xi meeting caught markets a little off-guard," said Sean Callow, senior currency strategist at Westpac in Sydney.

"There should be limited market follow-through however, with no indication at this stage that this is the start of a broad-based, sustained US military campaign."

Also Read: Here's What Led to Trump's Decision to Attack Assad's Airbase

The yen, a favoured haven in times of stress due to Japan's position as the world's largest creditor nation, climbed across the board. The dollar fell to 110.36, from 110.95 just before news of attacks hit dealing screens.

The dollar was otherwise unscathed, however, as it benefited from flows into safe haven US Treasuries. Against a basket of currencies it was barely lower, while the euro dipped a little to $0.0649.

Also Read:
Oil Prices Jump After US Launches Missile Strike in Syria

Yields on 10-year Treasury debt fell a couple of basis points to 2.31 percent, testing a hugely important chart barrier at 2.30 percent.

Spot gold prices zoomed up 0.8 percent to $1,260.50 an ounce and oil caught a bid on concerns the military intervention could impact supplies from the Middle East.

US crude jumped 85 cents to $52.55 a barrel, while Brent added 81 cents to $55.66.

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