The U.S. missile attack on Syria jolted financial markets, boosting haven assets and temporarily wresting investor focus from jobs data that may shed light on the strength of the world’s largest economy.
Gold, oil and government bonds were among the biggest gainers following the first military strike undertaken by President Donald Trump’s administration, as some traders sought safety and others judged increasing tension in the Middle East would spur crude. Russia’s ruble dropped the most in almost a month and its bonds fell as optimism over a detente with the U.S. evaporated. The lira and stocks retreated in Turkey, which shares a border with Syria.
Stock volatility across markets jumped in the wake of the attacks, but the initial impact began to fade for some assets. Investors are digesting a week of developments, from a meeting between Trump and President Xi of China, to Fed signals it may reduce its balance sheet this year and the ECB underscoring its dovishness. Attention now turns to payroll data, after a strong private reading and weak automaker sales gave conflicting signals on the U.S. economy.
“Will the soft data catch up with the hard data?” Mark Haefele, the global chief investment officer of UBS Wealth Management asked on Bloomberg TV. “We’re still watching it and we don’t think it’s time to pull up stakes on our overweight on U.S. equities.”
What investors will be looking out for:
– The U.S. March jobs report is expected to cap the strongest quarterly growth since 2012. Analysts predict non-farm payrolls will come in at 180,000, with some forecasts revised higher after strong private payroll numbers. Also of interest will be average earnings, set to rise 0.2 percent month-on-month.
– Euro-area finance ministers will try to break a months-long deadlock over Greece’s bailout in Malta today, after meetings in Brussels and Berlin this week failed to yield an accord that would pave the way for about 7 billion euros ($7.5 billion) in aid for Athens.
Here are the main moves in markets:
Asia:
– Japan’s Topix index climbed 0.7 percent, rebounding after erasing a rally of as much as 1.2 percent during the morning session. The Shanghai Composite Index rose 0.2 percent, giving it a 2 percent gain for the holiday-shortened week.
Currencies:
– The ruble dropped 0.9 percent as of 9:49 a.m. in London. The currency has been trading near the highest since July 2015. President Vladimir Putin believes the U.S. airstrikes caused “considerable damage” to relations with Russia, a Kremlin spokesman said.
– The Bloomberg Dollar Spot Index was little changed. The yen rose 0.1 percent to 110.67 per dollar, paring gains of as much as 0.6 percent.
– The euro slipped 0.1 percent, the British pound dropped 0.3 percent, and the Turkish lira pared losses to trade 0.4 percent lower.
Stocks:
– Futures on the S&P 500 slipped 0.1 percent.
– The Stoxx Europe 600 Index dropped 0.3 percent. Volatility measures from Hong Kong to Europe increased.
Bonds:
– The yield on 10-year Treasuries fell one basis point to 2.33 percent.
– Core European government bonds opened higher amid the broad flight-to-quality move after the Syria strikes. Early gains began to fade though, with 10-year bund yields trading lower by two basis points.
– In typical risk-off fashion, core bonds outperformed, and Italian and Spanish 10-year yields were little changed.
Commodities:
– West Texas Intermediate crude climbed 1.5 percent to $52.46, the highest in a month. Oil is up 3.8 percent for the week.
– Gold jumped 1 percent to $1,264.37, the highest since November, following two days of declines.
(c) 2017, Bloomberg
