Not surprisingly, last weekend’s missile strikes in Syria brought risk aversion to the Asian markets. Price reaction remained limited, however, as traders considered some positive news.
- New Zealand’s food price index up by 1.0% vs. 0.5% decline in February
- U.K.’s Rightmove house price index up by 0.4% vs. 1.5% increase in March
Mixed reaction to strikes in Syria
With no major report on the docket, Asian market players inevitably priced in last weekend’s geopolitical tensions.
If you recall, the U.S. coordinated with France and the U.K. to launch more than 100 missiles into alleged chemical weapon sites in Damascus in response to an alleged poison gas attack in the region days earlier.
Both British Prime Minister Theresa May and French President Emmanuel Macron have hinted that the strikes are “limited and targeted” for now, while U.S. Defence Secretary Jim Mattis called the attack a “one time shot.”
While the missile strikes is an escalation in the Western countries’ battle against the Syrian government, traders took comfort in the fact that (a) it remains “one off” for now and that (b) Russia hasn’t retaliated and has only warned of “chaos” if the attacks continue.
Despite that, the Asian bourses showed mostly mixed price action:
- Nikkei is up by 0.18% to 21,819.0
- Australia’s A SX 200 is up by 0.21% to 5,829.1
- Hang Seng is down by 1.47% to 30,355.9
- Shanghai index is down by 1.50% to 3,111.652.
Commodities also reflected the overall risk aversion and demand for safe havens like gold:
- Gold is up by 0.12% to $1,347.40
- Brent crude oil is down by 0.99% to $71.82
- U.S. WTI is down by 0.89% to $66.76
Major Market Mover(s):
The low-yielding yen made pips rain across the board as traders flocked to safe havens following last weekend’s escalation in geopolitical hostilities.
USD/JPY is down by 13 pips (-0.12%) to 107.22
EUR/JPY is down by 21 pips (-0.16%) to 132.36
CAD/JPY is down by 15 pips (-0.18%) to 85.02
CHF/JPY is down by 20 pips (-0.18%0 to 111.40
The low-yielding franc missed the risk aversion train and actually FELL against its major counterparts today.
Some analysts speculate that the move might have been caused by the fresh sanctions the U.S. had slapped on Russian businesses. Word around the hood is that Russians are heavily invested in Swiss companies.
Meanwhile, others believe that a sharp recovery of the Russian ruble – after a steep, post-sanctions selloff – might have triggered an unwinding of franc longs against the Russian currency.
USD/CHF is up by 7 pips (+0.07%) to .9624
EUR/CHF is up by 3 pips (+0.03%) to 1.1872
AUD/CHF is up by 9 pips (+0.12%) to .7498
GBP/CHF is up by 23 pips (+0.17%) to 1.3721
Watch Out For:
- 5:52 am GMT: Germany’s wholesale price index (0.4% expected, -0.3% previous)
- 7:15 am GMT: Switzerland’s PPI (0.4% expected, 0.3% previous)