Asian shares hit a seven-week low last night as concerns over a military strike against Syrian president Bashar al-Assad’s government escalated.
US markets closed down on similar concerns, with the S&P suffering its worst daily decline since 20 June. This came in spite of better-than-expected confidence indicators in the US and Germany.
The Washington Post reported late last night that the White House plans to publicly release evidence of how the Syrian regime used chemical weapons potentially as early tomorrow, and that a US-led military strike could be seen within days.
This added to existing uncertainty concerning the timeframe of the US Federal Reserve's tapering off of its asset purchasing programme.
The Shanghai Composite fell to a low of 2,080.86 – down 1.1 per cent from the previous close – but recovered most of these losses.
The Nikkei similarly experienced a late recovery after a stronger yen initially weighed it down, but remained suppressed at around 2,110.
Brent crude oil prices jumped 2.5 per cent to $117.23 per barrel on the ICE Futures Europe exchange as tensions heightened – the highest since 25 February.
Michael Wittner, head of oil market research at Societe Generale, estimates the price of brent crude could rise to as high as $125 per barrel in the coming days in anticipation or event of a military strike, and may “spike briefly” to $150 per barrel if an attack disrupts supply from Iraq and other Middle Eastern producers.
Gold also hit multi-month highs at $1,416.
The FTSE is expected to open down this morning.
No hiding place in Europe at the opening this morning though the blood letting may not be so measurable - FTSE -30, DAX -29, CAC -6— David Buik (@truemagic68) August 28, 2013
European markets set for another day of losses. FTSE -31, DAX-28, CAC -4, IBEX-26 (courtesy of IG)— Carolin Roth (@CarolinCNBC) August 28, 2013
FTSE 100 set to open in the red as Syria continues to haunt the markets $INDU— Dow Jones News (@dowbands) August 28, 2013
Key events today:
Eurozone M3 money supply for July at 09:00. Expected to fall from 2.3 per cent in July 2012 to 2.0 per cent.
Bank of England governor Mark Carney speaks at UK parliament at 12:45.
US Pending home sales for July at 15:00. Expected to fall from 9.1 per ent to 7.9 per cent year-on-year, and rise from -0.4 per cent to 0.0 per cent month-on-month.