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Asian traders tread uneasily as Syria strike fuels tensions

Apr 10 2017 07:12

Hong Kong - Asian investors moved cautiously on Monday as last week's US missile strikes on a Syrian airfield fuelled geopolitical tensions and led to sabre-rattling between Washington and Russia.

There are fears about brewing tensions between the two powers, with the US suggesting there can be no peace while Moscow-backed Bashar al-Assad remains Syria's president.

Greg McKenna, chief market strategist at AxiTrader, said the attack showed the US was not pulling back from its role as a world policeman, despite Donald Trump's isolationist rhetoric.

"That might be a surprise in a few capital cities across the globe. It will shake up global geopolitics, raise uncertainty, and have implications for markets," he said.

He added that Washington's insistence that it wanted the Assad regime removed could also stir trouble with Iran and Russia. "What will they have to say about that? What might they do? This could be the first real US-Russia face off since the (Berlin) Wall came down in the 1990s."

In early trade Hong Kong stocks were 0.1% down and Shanghai lost 0.2%, while Seoul shed 0.6% and Singapore 0.1%.

However, Tokyo ended the morning 0.7% higher thanks to a drop in the yen against the dollar. Wellington and Taipei also chalked up minor gains.

Investors were left underwhelmed by a well below-forecast US employment report that highlights the tough job Trump has in fulfilling his pledge to create 25 million jobs.

The 98 000 new posts was almost half what had been expected and adds to concerns on trading floors after Federal Reserve minutes last week showed its policymakers are considering a plan to tighten monetary policy by sucking cash out of the financial system.

Oil prices extended gains after Friday's rally, which came after the US bombings on concerns about supply from the crude-rich Middle East.

Jeffrey Halley, senior market analyst at OANDA, said in a note that both main contracts "will continue to be headline rather than fundamental driven this week".

"Although Friday's Syria strike was almost certainly a one-off, with so many players in close proximity the situation will remain 'fluid' to say the least," he added.

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