Stocks off lows, oil rallies after US missile strike on Syria

Reuters London | Updated on January 15, 2018 Published on April 07, 2017


Oil prices held near one-month highs on Friday after the United States attacked a Syrian air base but stocks and the dollar recovered early falls when a US official played down the risks of an escalation.

The US dollar recouped all of its losses against a basket of major currencies and was last trading little changed. S&P 500 futures were down 0.1 per cent.

European stocks fell 0.3 per cent weighed down by weakness in mining stocks as investors locked in some profits following the sector's stellar run this year.

The United States fired dozens of cruise missiles at a Syrian air base from which it said a chemical weapons attack was launched this week, an escalation of the US military role in Syria that swiftly drew sharp criticism from Russia.

A US defence official told Reuters the missile strike was a “one-off", helping to calm market nerves.

“The US missile strike on a Syrian air base overnight caused a knee-jerk shift into safe havens, although the impact was moderate as it is being interpreted as a one-off proportionate response,” said Ian Williams, a strategist at Peel Hunt in London.

Oil prices hovered near one-month highs though prices pared some gains as there seemed no immediate threat to supplies.

Brent crude futures which surged more than 2 per cent after the US attack were last up 1.5 per cent at $55.72 a barrel. US West Texas Intermediate (WTI) crude futures were up 1.6 per cent.

Focus was also shifting to US payrolls later in the day for further cues on the strength of the economy. Job growth likely slowed in March after unseasonably mild weather boosted hiring over the prior two months.

Elsewhere, euro zone finance ministers are due to meet with a discussion on Greece's progress in implementing reforms needed to unlock aid part of the agenda.

Non-farm payrolls probably increased by 180,000 jobs last month, according to a Reuters survey of economists.

Investors had already been on edge with talks poised to begin between Donald Trump and Chinese leader Xi Jinping over flashpoints such as North Korea and China's huge trade surplus with the United States.

Spot gold was up a per cent, while high-rated euro zone government bonds edged lower.

The yield on Germany's 10-year government bonds fell to a one-month low. Overnight, US Treasury yields dropped to their lowest level in over four months at 2.29 per cent.

“Safe-haven flows are always affected by political events, and when it affects countries where the U.S. and Russia are interested, then investors become even more nervous because of relations (between those two),” said DZ Bank strategist Daniel Lenz.

“Especially now you also have talks between the U.S. and China on North Korea,” he added.

Published on April 07, 2017
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