Markets rebound as Syria apprehension eases
AP and AFPLONDON/HONG KONG--Indications that a U.S.-led military intervention in Syria may not be happening imminently allowed investors to regroup Thursday, helping stocks to push higher and oil prices to drift back.
August 30, 2013, 12:00 am TWN
The prospect of an immediate multinational response diminished late Wednesday after the U.N. Security Council's permanent members failed to agree to a proposal to use force against Syria.
And U.S. President Barack Obama also gave the impression that he had not yet decided to back a military strike. The U.K. government also backed down on a parliamentary vote to authorize British participation in any strike against Syria until U.N. inspectors reveal their findings on the apparent chemical attack in the suburbs of Damascus that has been blamed on the government of President Bashar Assad. The report is expected within a week.
“What seems like a delay in U.S. and allied military action in Syria is providing temporary relief for the equity markets that endured weakness earlier in the week,” said Neil MacKinnon, global macro strategist at VTB Capital.
For now though, stock markets in Europe and Asia tracked their U.S. counterparts higher.
In Europe, the FTSE 100 index of leading British shares was up 0.5 percent at 6,459 while Germany's DAX rose 0.3 percent to 8,184. The CAC-40 in France was 0.2 percent higher at 3,967.
Wall Street was poised for further modest gains at the open, with Dow futures up 0.2 percent and the broader S&P 500 futures 0.1 percent higher.
How U.S. markets open could well hinge on a raft of economic data due, including weekly jobless claims and an updated reading of second-quarter economic growth. The previous estimate showed the U.S. economy grew by a 2.2-percent annualized rate in the April to June quarter.
“With Syria perhaps on the back-burner for a while, today may see the market switch its attention back to economic data,” said Michael Every, an analyst at Rabobank International.
Up until this week, the main focus of attention through the summer months has been whether the Federal Reserve will start to reduce its monetary stimulus as soon as next months. A run of largely solid economic figures had raised the likelihood of that happening but recently the data have been a little bit more mixed.
The Fed is currently buying US$85 billion worth of financial assets a month in an attempt to lower borrowing rates and shore up the U.S. economy.
The money has been one of the reasons why stock markets around the world have recovered over the past few years following the global financial crisis so the prospect of a reduction in the stimulus, or so-called tapering, has been met with concern by a number of investors even though it would indicate economic conditions getting back to normal.
Meanwhile in Asia, Tokyo rose 0.91 percent, or 121.25 points, to 13,459.71, while Sydney added 0.10 percent, or 5.2 points, to close at 5,092.4 and Seoul advanced 1.22 percent, or 23.02 points, to 1,907.54.
Hong Kong climbed 0.84 percent, or 180.13 points to 21,704.78, but Shanghai fell 0.19 percent, or 4.07 points, to 2,097.23.