Hopes of Syria breakthrough gives markets a lift
AP and AFPLONDON/HONG KONG -- Hopes that a U.S.-led military strike on Syria may be avoided following Russia's call for Damascus to put its chemical weapons under international control gave stocks a big lift Tuesday as well as pushing oil prices lower for the second day running.
September 11, 2013, 12:11 am TWN
Over the past couple of weeks, the steady drumbeat to war had spooked investors and weighed on a number of financial assets, such as stocks, but underpinned oil prices.
However, on Monday, it appeared that an imminent strike was unlikely especially after President Barack Obama said Russia's proposal could potentially be “a significant breakthrough,” despite his skepticism that the Syrian government would follow through.
On Tuesday, hopes of a diplomatic breakthrough rose further after Russia's Foreign Minister Sergey Lavrov said his country was working with Syria to prepare a detailed plan of action, which will be presented shortly.
In Europe, the FTSE 100 index of leading British shares was up 0.8 percent at 6,582 while Germany's DAX rose 1.6 percent to 8,408. The CAC-40 in France was 1.4-percent higher, too, at 4,095.
Wall Street was poised for a solid opening too, with Dow futures up 0.4 percent and the broader S&P 500 futures 0.5 percent higher.
Developments surrounding Syria will likely remain the main point of interest across financial markets through the day especially as the scheduled economic news out of Europe and the U.S. remains light.
Despite the euphoria evident in markets around the world Tuesday, risks remain. As well as monitoring developments over Syria, investors have a crucial meeting of the U.S. Federal Reserve looming. The central bank is widely expected to announce plans to start phasing out its support program for the U.S. economy following its meeting next week.
In Asia, markets extended gains on Tuesday, with investors buoyed by a string of upbeat global economic data as well as signs that a U.S.-led strike on Syria could be averted. Buying sentiment was also boosted by a rally on Wall Street, while Japanese traders were still on a high after Tokyo's successful bid to host the Olympic Games in 2020.
Tokyo was up 1.54 percent, or 218.13 points, at 14,423.36, adding to its 2.48-percent rise on Monday as Olympic-related firms enjoyed further buying.
Sydney advanced 0.38 percent, or 19.7 points, to close at 5,201.2, while Seoul added 0.98 percent, or 19.39 points, to 1,994.06.
Shanghai rose 1.15 percent, or 25.47 points, to 2,237.98, boosted by news that industrial production in China had expanded in August at its fastest rate in more than a year. Hong Kong climbed 0.99 percent, or 226.00 points to 22,976.65.
The gains follow strong trade figures Monday and add to recent results pointing to a pick-up in the world's number two economy and key driver of global growth.
Also Monday Japan said its economy expanded at a faster pace in the April-June quarter than originally estimated, fuelling hopes that years of anemic growth could be coming to an end.