Traders were preparing for an important day on Friday, with the key U.S. monthly jobs report and the first Sino-American summit since Donald Trump took office set to offer direction.
Then Trump launched a missile attack against Syria.
The move triggered an instant reaction across everything from stocks to commodities and currencies, as seen in the charts below. While some of the initial moves have tapered off — for example, Korean won losses have eased — the strike raised questions about Trump’s broader foreign and national-security strategy. It came just as he meets his Chinese counterpart, Xi Jinping, where North Korea’s nuclear program is likely to be on the agenda. The U.S. hasn’t ruled out unilateral action against the nuclear-armed China ally.
“The markets will just be very jittery all day,” said James Audiss, senior wealth manager at Shaw and Partners Ltd. by phone from Sydney. “Markets have been looking for a reason to sell off. The uncertainty that surrounds this gives them a definite cause to do that and there’s absolute spillover into the South Korean market because of the North Korean situation.”
These charts show how the strike played out in markets:
The MSCI Asia Pacific Index is down 0.2 percent as of 1:47 p.m. Tokyo time, reversing an earlier climb of as much as 0.5 percent, with benchmarks in Hong Kong, Australia, Taiwan and Indonesia declining. Japan’s Topix index initially pared gains, but is up 0.9 percent.
Emerging-market currencies fell on the news, with the won leading declines in Asia. South Korea’s currency is now little changed, after slipping as much as 0.6 percent:
Gold is driving a strong rally in precious metals, favored in times of uncertainty for their fixed returns.
“Whether the market reaction is temporary or will continue will depend on the reactions from the international community,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd. “We can’t see that at the moment so it’s hard to digest.
Investors are probably preparing to escape to safe havens when the next news strikes.”
Likewise, government debt is finding bids, led by the U.S.:
Elsewhere in currencies, the yen is being favored over other havens given news of the missile launch landed at the start of the Asian trading day.
The prospect of an uptick in tensions in the Middle East buoyed oil prices, with both Brent and West Texas Intermediate crude surging more than 1.4 percent.