Traders and investors around the world experienced a turbulent Friday last week, with the Syria missile attack, non-farm payrolls and the ‘Trump-Xi summit’ dominating the agenda and triggering a series of knock-on reactions between currencies, commodities and stocks.
Volatility was substantially higher last week, and safe-haven asset prices soared as geopolitical tensions and financial uncertainties rose. Therefore, a ‘risk-off’ sentiment will probably continue to overshadow stock markets in the near term.
First of all, President Trump surprisingly launched 60 missiles to attack Syria’s air base last Thursday, triggering a ‘knee-jerk’ reaction in gold and crude oil prices, both of which soared to their highest levels in over a month. The gold price spiked above $1,270 before coming off to the $1,253 area this morning.
The near-term support and resistance levels remain around $1,248 and $1,265 respectively. The WTI crude oil price climbed to $52.2 per barrel, despite rising inventory in the US side. Its immediate support and resistance levels can be found at around the $51.7 and $54.7 areas respectively.
Concerns arose around Middle East tensions, extending to the US’ future approach in the North Korea nuclear issue, as the missiles were launched at Syria a few minutes after Trump met Chinese leader Xi Jinping in their first summit in Florida.
It’s difficult to predict how President Trump will handle the rising North Korea nuclear crisis. A few days before the meeting, Trump had said that the US is prepared to act unilaterally on North Korea if necessary, making a complex issue more complex still. China is not, however, likely to allow this to happen easily.
This meeting carried significant political meaning because it was expected to set a framework of future talks between the US and China, the two largest economies in the world. Trade, currencies and the North Korea issue topped the list of points of discussion. Few significant deals were made during Xi’s 24-hour stay in Mar-a-Lago, but China expressed willingness to give the US better access to financial-sector investment and US beef exports to China, as concessions.
Last but not least, the US nonfarm payroll number rose 98k in March, falling very short of the consensus expectation of a 180k increase. The unemployment rate fell, however, to a 10-year low of 4.5%, which underpinned the nonfarm disappointment. Market reaction was muted on this, and dollar index extended gains to around the 101.1 area, the highest reading in over five weeks. The strong dollar is likely to have a negative impact on commodities prices in the days to come.
