Talking Points
- Asian markets were choppy after news of heavy US missile strikes against Syria
- These overshadowed more regular economic concerns, but some markets still managed to rise
- The US Dollar edged lower, with the Yen catching its usual haven bid
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Asian markets were roiled Thursday by news of major US missile strikes against an airfield in Syria, the first direct assault made by the world’s only superpower against the regime of Syrian President Bashar al-Assad.
President Donald Trump said the strikes were in retaliation for the chemical attack which killed more than 80 civilians in the Syrian town of Khan Sheikhoun on Tuesday. The news initially sent stock markets lower and boosted haven assets such as gold. International reaction has filtered in with Australia and the UK offering the US at least moral support, and Russia angrily suggesting that the US actions were illegal.
The strikes overshadowed the meeting between Mr. Trump and his Chinese counterpart Xi Jinping. That seems to have been at least cordial, despite the plentiful rhetoric directed against China’s economic policies by the White House. It also crowded out the drum beat of more usual economic news. Markets would normally have spent the day looking nervously toward the US, waiting for April’s crucial labor-market statistical release. That’s still coming later, with an increase of 180,000 nonfarm jobs expected.
Japan’s Nikkei hit a four-month low of 18,517.43 on news of the US action, but recovered remarkably to end up 0.4%. Reports suggested that rebounding US stock futures helped Nikkei bulls’ cause, but the index is still down 1.3% for the week, its fourth straight weekly fall. Most regional bourses were also lower but Chinese stocks hung on in the green.
The US Dollar skidded against the Japanese Yen, which tends to gain when geopolitical tension is elevated and Japanese investors repatriate offshore funds. However, the US Dollar Index was down only slightly on the day and remained higher for the week.
Crude oil prices rose more than 2% in response to the US attack, before easing somewhat. Brent was still up about 1.5% late in Asia, with the US benchmark higher by a similar amount. Gold prices neared five-month peaks as investors sought out the oldest haven of all. The session’s top of $1.269.29/ounce hadn’t been seen since November 10.
The rest of global Friday offers a packed data sked, topped of course by those official US labor market statistics. There’ll also be UK industrial production numbers, German trade figures and the official Canadian employment report. Bank of England Governor Mark Carney will speak in London, New York Fed Chief William Dudley in his home city. The state of the US shale industry will also be under the spotlight with the Baker Hughes rig count.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
