Market update: Kerry’s warning to Syria shakes markets- 27.08.2013

Source: Henderson Global Investors

Wall Street dipped lower in thin volume yesterday (Dow Jones -0.4%; S&P 500 -0.4%) given geopolitical fears surrounding Syria. US Secretary of State, John Kerry, spoke out against the Syrian government saying there was undeniable evidence that a chemical weapons attack had occurred in a rebel-held suburb of Damascus. Syrian President, Bashar al-Assad, has denied involvement, blaming terrorists, and warning that any military action taken against his government would breach international law. In economic news, the US Commerce Department reported that orders for durable goods had dropped 7.3% in July, the steepest fall in a year. This, together with data on Friday that showed single-family new home sales had declined sharply in July, has raised questions over the strength of the US recovery.

European stocks are in the red this morning, taking their lead from yesterday’s developments (FTSE Eurofirst 300 -1.3%; FTSE 100 -1.0%). Banks and mining stocks are among the steepest fallers as investors reallocate money into perceived safe havens such as gold, which has reached the US$1,400 level, while the Swiss franc is also in demand. Brent crude is also moving higher, currently at US$111 per barrel, its highest level in five months.