Gold and oil prices surge, while world shares fall as Western intervention in Syria looms

 

Shares across the world fell yesterday as the prospect of military intervention in Syria sent jitters through the financial markets.

While stock exchanges in the Middle East predictably tumbled as the interventionist rhetoric in London and Washington intensified, Western markets also sank heavily as the uncertainty added to pre-existing worries about macro-economic issues such as the US Federal Reserve's plans for "tapering" its $85bn-a-month quantitative easing programme.

Dubai shares had their biggest fall since the country's economic crisis in 2009, tumbling 7 per cent by the close of trading as local brokers reported Western investors fleeing.

"It's down to geopolitics.... Foreigners are apparently selling and exiting the market," al-Ramz Securities' head of research Talal Touqan told Bloomberg in Dubai.

Saudi Arabia's index fell more than 4 per cent while Kuwait and Abu Dhabi both fell 3 per cent. Iran's foreign ministry has warned a US attack on Syria could drag the whole Middle East into the conflict.

Analysts said Dubai had the most to lose from a conflict because of its economy's reliance on tourism and trade in the region, as well as its stock market's strong gains this year.

European shares fell 3 per cent, while the main indices in London and New York both retreated around 1 per cent, with the Dow Jones Industrial Avereage shedding 170 points. The Nasdaq index was even lower, falling by over 2 per cent. The prospect of a widening conflagration in the region sent the oil price sharply higher. Brent crude leapt to six-month highs, settling at $3.63 a barrel to $114.36 – its highest price in six months.

Brenda Kelly, the head of strategy at IG, said: "Unrest in the Middle East and the potential for increased volatility tend to put the risk on the upside for oil, and any prolonged disruptions to pipeline supply could send the oil price back to this year's highs of $119."

Gold, also rose sharply, as did the Japanese yen and Swiss franc. Government bonds in the US, UK and Germany attracted large amounts of safe-haven investment.

Market strategists said the Syrian situation was exacerbating the flight of investors out of emerging markets, adding to the concerns taking hold about the impact on such countries of an end to the super-low interest rates and quantitative easing in the US.

The Indian rupee fell to yet another record low with investors now worrying that the Syria-induced oil-price rise would make India's current account deficit even worse. India is almost entirely at the whim of the foreign commodities markets, importing nearly 80 per cent of its oil.

The recent attack on emerging markets by investors has particularly been focused on countries such as India, with imports significantly outweighing exports. Now trading at 66.075 to the US dollar, the rupee has fallen 17 per cent this year.

Investors in the UK have become increasingly concerned about whether to believe the pledge from the new Bank of England Governor, Mark Carney, to keep interest rates on hold until mid-2016, when he believes unemployment will have fallen from 7.8 per cent to 7 per cent.

Given the improving flow of data on the economy, markets are rapidly beginning to expect this point will come far sooner, possibly more than a year in advance of Mr Carney's forecast. The Governor gives a key speech today, at which he is expected to defend his position by focusing on the continued strains facing the UK economy, in particular its jobs market.

News
scienceExcitement from alien hunters at 'evidence' of extraterrestrial life
Life and Style
Customers can get their caffeine fix on the move
food + drink
News
newsRyan Crighton goes in search of the capo dei capi
Extras
indybest

PROMOTED VIDEO
Arts and Entertainment
Actors front row from left, Jared Leto, Jennifer Lawrence, Meryl Streep, Ellen DeGeneres, Bradley Cooper, Peter Nyongío Jr., and, second row, from left, Channing Tatum, Julia Roberts, Kevin Spacey, Brad Pitt, Lupita Nyongío and Angelina Jolie as they pose for a
film
Sport
sport
Life and Style
techCould new invention save millions in healthcare bills?
Sport
David Moyes gets soaked
sport Moyes becomes latest manager to take part in the ALS challenge
Voices
A meteor streaks across the sky during the Perseid Meteor Shower at a wind farm near Bogdanci, south of Skopje, Macedonia, in the early hours of 13 August
voicesHagel and Dempsey were pure Hollywood. They only needed Tom Cruise, says Robert Fisk
News
peopleEnglishman managed quintessential Hollywood restaurant Chasen's
Life and Style
food + drinkHarrods launches gourmet food qualification for staff
Arts and Entertainment
Michael Flatley prepares to bid farewell to the West End stage
danceMichael Flatley hits West End for last time alongside Team GB World champion Alice Upcott
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
Horst P Horst mid-fashion shoot in New York, 1949
fashionFar-reaching retrospective to celebrate Horst P Horst's six decades of creativity
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
i100
Life and Style
Black Ivory Coffee is made using beans plucked from elephants' waste after ingested by the animals
food + drinkFirm says it has created the "rarest" coffee in the world
Life and Style
news

As Voltaire once said, “Ice cream is exquisite. What a pity it isn’t illegal”

Life and Style
food + drinkThese simple recipes will have you refreshed within minutes
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Network Engineer - CCNP, Hedge Fund, London

£50000 - £60000 per annum: Harrington Starr: Network Engineer - CCNP, Hedge Fu...

Senior Network Engineer-CCIE, Multicast, Low Latency

£60000 - £70000 per annum: Harrington Starr: Senior Network Engineer-CCIE, Mul...

Network Infrastructure Engineer

£30000 - £50000 per annum: Harrington Starr: Network Infrastructure Engineer (...

Network Engineer (CCNP, BGP, Multicast)

£35000 - £45000 per annum: Harrington Starr: Network Engineer (CCNP, BGP, Mult...

Day In a Page

All this talk of an ‘apocalyptic’ threat is simply childish

Robert Fisk: All this talk of an ‘apocalyptic’ threat is simply childish

Chuck Hagel and Martin Dempsey were pure Hollywood. They only needed Tom Cruise
Mafia Dons: is the Camorra in control of the Granite City?

Mafia Dons: is the Camorra in control of the Granite City?

So claims an EU report which points to the Italian Mob’s alleged grip on everything from public works to property
Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Once the poor relation, the awards show now has the top stars and boasts the best drama
What happens to African migrants once they land in Italy during the summer?

What happens to migrants once they land in Italy?

Memphis Barker follows their trail through southern Europe
French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

The ugly causeway is being dismantled, an elegant connection erected in its place. So everyone’s happy, right?
Frank Mugisha: Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked

Frank Mugisha: 'Coming out was a gradual process '

Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked
Radio 1 to hire 'YouTube-famous' vloggers to broadcast online

Radio 1’s new top ten

The ‘vloggers’ signed up to find twentysomething audience
David Abraham: Big ideas for the small screen

David Abraham: Big ideas for the small screen

A blistering attack on US influence on British television has lifted the savvy head of Channel 4 out of the shadows
Florence Knight's perfect picnic: Make the most of summer's last Bank Holiday weekend

Florence Knight's perfect picnic

Polpetto's head chef shares her favourite recipes from Iced Earl Grey tea to baked peaches, mascarpone & brown sugar meringues...
Horst P Horst: The fashion photography genius who inspired Madonna comes to the V&A

Horst P Horst comes to the V&A

The London's museum has delved into its archives to stage a far-reaching retrospective celebrating the photographer's six decades of creativity
Mark Hix recipes: Try our chef's summery soups for a real seasonal refresher

Mark Hix's summery soups

Soup isn’t just about comforting broths and steaming hot bowls...
Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'

Tim Sherwood column

I would have taken the Crystal Palace job if I’d been offered it soon after my interview... but the whole process dragged on so I had to pull out
Eden Hazard: Young, gifted... not yet perfect

Eden Hazard: Young, gifted... not yet perfect

Eden Hazard admits he is still below the level of Ronaldo and Messi but, after a breakthrough season, is ready to thrill Chelsea’s fans
Tim Howard: I’m an old dog. I don’t get too excited

Tim Howard: I’m an old dog. I don’t get too excited

The Everton and US goalkeeper was such a star at the World Cup that the President phoned to congratulate him... not that he knows what the fuss is all about
Match of the Day at 50: Show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition

Tom Peck on Match of the Day at 50

The show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition