Oil, gold open lower despite Syria strikes
Gold and oil traded slightly lower as markets opened for the first time since Western powers launched a missile attack on Syria, but equities are unlikely to experience big losses unless the West strikes again or Russia retaliates.
"The news flow is actually better than what it looked like at one point during last week, as the strike was surgical, followed by a pullback. Reports show a lot of care was taken not to hit Russian targets, which is a good sign and the market should take heart from that," said Salman Ahmed, chief investment strategist at Lombard Odier investment managers in London, speaking before trading resumed. Spot gold and major crude benchmarks eased slightly, as the market reacted to the military actions over the weekend. Treasuries also weakened, while equities rose.
Gold has benefited in recent days as a safe-haven asset amid a US-China trade dispute and the escalating conflict in Syria, which also pushed oil above $70 a barrel because of concerns about a spike in Middle Eastern tensions. "It ended up being a very measured attack," said John Kilduff, a partner at Again Capital Management in New York. "The greater fears of the oil market of this spilling into a greater conflict that could involve Iran and Saudi Arabia has not and will not come to pass."
World stocks wobbled last week but still ended with the best weekly gain in over a month, as investors await potentially healthy US company earnings. Despite heightened geopolitical risks, the impact on so-called safe-haven assets has been short-lived and modest. While the yen rose initially on fears of a Syrian strike, it ended near seven-week lows to the dollar last week.
On Saturday, US, French and British missile attacks struck at the heart of Syria's chemical weapons program in retaliation for a suspected poison gas attack a week ago, although the assault appeared unlikely to halt Syrian President Bashar al-Assad's progress in the seven-year-old civil war.
The bombing, denounced by Damascus and its allies as an illegal act of aggression, was the biggest intervention by Western countries against Assad and his powerful ally Russia. But the three countries said the strikes were limited to Syria's chemical weapons capabilities and not aimed at toppling Assad or intervening in the civil war. Naeem Aslam, chief market analyst at Think Markets, said gold was poised to gain on Monday.