Over the past several weeks, market participants say that much of the trading activity in the U.S. stock market has almost entirely been driven by the White House, with trade policy and rising military tensions sparking turbulence on Wall Street.
Another factor has recently emerged: the prospects of a Western strike against Syrian President Bashar al-Assad. The odds of this are seen as having grown since a suspected government-sanctioned chemical-weapons attack killed civilians near Damascus over the weekend.
On Wednesday, President Donald Trump implied in a tweet that a missile attack on Syria wasn’t far off, saying, “Get ready, Russia.” That sent the Dow Jones Industrial Average
DJIA, +1.34%
down about 220 points and the S&P 500 index
SPX, +0.99%
closed 0.6% lower.
But early Thursday, a fresh tweet from Trump sounded less bellicose, as the president posted: “Never said when an attack on Syria would take place. Could be very soon or not so soon at all!”
While the tension represents another element of uncertainty for a market that isn’t lacking them, analysts said investors should be cautious about making big decisions off the news, as such military strikes typically have limited market impacts, particularly over the longer term.
“While the human toll is immeasurable, 25 years of history shows us that the market impacts of US missile strikes have generally been small and brief,” wrote Jeffrey Kleintop, the chief global investment strategist at Charles Schwab & Co., in a LinkedIn post. He offered the following chart, which showed that in the first day after such a strike, global stocks typically decline—falling in 58% of such sessions—although the average move is just a drop of 0.2%, the kind of shift that happens almost daily.
Over a five-day period following such a strike, stocks typically drop an average of 0.3%; such sessions are negative 42% of the time.
While short-term market movements can be driven by changing geopolitical trends—particularly ones centered in the Middle East, given the region’s influence on oil prices—longer-term action is seen as related to corporate profits and economic growth rates.
Missile strikes, particularly ones that don’t represent the start of a protracted military conflict, are seen as having little to no impact on either factor, from either a U.S. or a global perspective, the data show.
Source : MTV
