Oil prices slid yesterday amid relief that US-led strikes on Syria did not provoke an escalation in the conflict, easing investor fears about the security of crude oil supply.
Russia holding back on any military riposte helped lift the Wall Street, as did strong retail sales, but European equities closed lower as the region’s key currencies strengthened against the dollar.
Across Europe, London’s FTSE 100 fell 0.9% to close at 7,198.20; Frankfurt’s DAX 30 was down 0.4% at 12,391.41, while Paris’ CAC 40 closed down 0.04% at 5,312.96.
“The limited and targeted strikes in Syria that provoked no serious response from Russia were a relief to markets that were pricing in escalation,” said Jasper Lawler, head of research at LCG.
The US, Britain and France carried out attacks at the weekend on chemical weapons facilities, in response to what they say was a toxic gas attack by the Russia-backed Syrian regime a week before.
“We can understand why the oil price has tended to fall rather than gain today in response to the West’s military strike against Syria,” Commerzbank commodities analysts said in a note. “After all, the tough response announced by Russia has failed to materialise,” they said.
“The strike on Syrian chemical locations over the weekend marks the end of the recent standoff,” noted IG analyst Joshua Mahony. “Market realisation that this attack largely draws the line under the issue has brought about a sharp decline in oil prices,” he said.
The commodities-heavy FTSE-100 in London slipped as oil prices slid, and shares in BP and Shell both fell.
Also weighing on the FTSE 100 index was a strong pound which hit the share prices of multinationals earning large amounts in other currencies.
“Even though investors have moved past the Syria missile strikes and are working on the basis that there will be no extended conflict or market-adverse retaliation, equity markets are struggling for direction,” noted Interactive Investor analyst Rebecca O’Keeffe.
US stocks got a fillip from US retail sales rising for the first time in four months, with sentiment also boosted by Bank of America beating earnings estimates with first-quarter profits rising by a third to $6.5bn.
British advertising and marketing group WPP topped the FTSE fallers after chief executive Martin Sorrell resigned over the weekend.
Sorrell’s departure came 10 days after WPP launched an independent probe into allegations of his personal misconduct through the misuse of company assets.
The company, widely regarded as a bellwether for the global advertising industry, was around 3% lower in late trading, having earlier fallen by more than 5%.
“WPP has been losing ground in the advertising world recently, as traditional advertising is losing out to online and social media marketing,” said CMC Markets analyst David Madden. “Sir Martin was an integral part of WPP, and some market confidence has been lost now that he is no longer at the helm.”
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