All Quiet on the Western Front: Financial Markets seem to ignore the geopolitical tensions for now

The US-led military strike against Syria’s alleged chemical arms infrastructure was a one-time move according to the UK Foreign Secretary Boris Johnson even as the US signaled it’s ready to punish the Middle Eastern country again if it keeps using banned weapons. The announcement made seems to be highly pro-market oriented, as western leaders do realise that actions against Syria might seriously shock the markets especially the commodities ones.

For now, traditional risk markets left unmoved but worries persist as US likely to ramp up Russian sanctions. The lack of a flight to safety is most apparent on short-dated US government debt, where sustained selling took the yield on the 2-year Treasury to its highest since September 2008, at 2.3867%.

European bourses are holding their ground after a steady showing in much of Asia and investors are not moving into haven assets, in a measured market response to the weekend’s US-led military strikes against Syria. European equity markets opened flat to +0.25%, traditional safe haven currencies the JPY and CHF were little changed while oil edged lower after last week’s bullish surge. European macro-calendar is empty on Monday shifting focus on sentiment and the US retail sales data due on Monday afternoon.

The conclusion in general: The US-led military intervention in Syria did not yet spur any massive currency market reaction as it is seen as being unilateral and once-off action. Oil prices are coming off last week’s three-year highs as investors hope that the conflict will not escalate.

Russia: Russian assets are looking exposed on expectations of sanctions from Washington on Moscow, where President Vladimir Putin remains an ally of Syrian leader Bashar al-Assad.

The rouble is weaker by a further 1.5% to Rbs 62.9930 per dollar, leaving it around last week’s intraday nadir of Rbs 65 — a level it previously traded at in late 2016.

Sources:

https://www.ft.com/content/5c993d18-4116-11e8-93cf-67ac3a6482fd

https://www.investing.com/news/stock-market-news/european-shares-steady-after-usled-strike-on-syria-wpp-falls-1395715

https://www.fxstreet.com/analysis/european-fx-outlook-life-after-striking-syria-sees-us-dollar-little-changed-201804160557

https://www.dailyfx.com/forex/market_alert/2018/04/16/Markets-Brush-Off-Geopolitics-Gold-Nears-Strong-Support.html