Australian shares and the dollar have rebounded after coming under pressure following a shock US missile strike on Syria that caused a plunge in regional equity markets and sparked a rally in oil and gold prices.
The local stock market, along with key Asian exchanges, fell as news of the missile strikes, launched by US warships against a Syrian airbase, broke late on Friday morning.
The S&P/ASX200 index fell back as much as 0.3 per cent to an intra-day low of 5,838.3 points before finishing 0.11 per cent higher on the back of strong gains across the energy sector.
The financial sector also recovered most of its earlier losses to finish broadly flat.
Shaw and Partners senior private client adviser Craig Sidney said the market was down 24.5 points for the week, suggesting the fallout from the US strike has been limited for now.
“That would imply the market’s not that worried about what’s going on in Syria at this point, otherwise our market would be down a lot more,” he said.
The Australian dollar dropped to a one-month low following the US strike on Syria with analysts warning that the uncertainty about the US and Russia will keep pressure on the currency.
The Aussie dropped to 75.24 US cents around lunch time, its lowest level since March 11.
Westpac senior currency strategist Sean Callow said it was a “textbook market response” for traders to sell risk currencies like the Aussie in times of uncertainty.
The attack on a Syrian airbase controlled by the forces of Syria’s President Bashar al-Assad came after US President Donald Trump had been dining with Chinese President Xi-Jinping at a key meeting in Florida and Mr Callow said the timing was surprising.
“The markets weren’t ready for the dinner to be wrapped up quickly so the missiles could be fired,” he said.
Oil futures surged more than two per cent to a one-month high on Friday following the missile strikes, helping drive gains in Woodside Petroleum, Origin Energy and Santos.
But oil prices later lost some ground as there appeared to be no immediate threat to supplies.
The investor uncertainty pushed gold prices up about $US10 during the trading session, lifting gold stocks such as Northern Star and Newcrest Mining by 5.6 and 2.8 per cent respectively, he said.
IG market strategist Gary Burton said the local market recovered somewhat once investors digested the news.
“We saw gold ease back from its highs and oil easing back a little bit, and we’re seeing the US futures rally also,” he said.
US futures were down about 47 points around 1530 AEST after falling as much as about 150 points earlier in the local trading session, Mr Burton said.
The closely-watched US employment report, due later Friday US time, and Russia’s response to the US strike on Syria is expected to determine how Wall Street ends the week, he said.
At 1700 AEST, the Aussie was trading at 75.24 US cents, down from 75.48 US cents on Thursday.
Bond prices also eased back in afternoon trade from strong rallies as calm returned to markets.
ON THE ASX:
* The benchmark S&P/ASX200 was up 6.2 points, or 0.11 per cent, at 5,862.5 points.
* The broader All Ordinaries index was up 5.3 points, or 0.09 per cent, at 5,902.6 points.
* The June SPI200 futures contract was up four points, or 0.07 per cent, at 5,852 points at 1630 AEST.
* National turnover was 2.69 billion securities traded worth $5.3 billion.
CURRENCY SNAPSHOT AT 1700 AEST:
One Australian dollar buys:
* 75.24 US cents, from 75.48 US cents on Thursday
* 83.14 Japanese yen, from 83.40 yen
* 70.67 euro cents, from 70.68 euro cents
* 60.39 British pence, from 60.44
* 107.91 New Zealand cents, from 108.16 NZ cents
GOLD:
The spot price of gold in Sydney at 1700 AEST was $US1,263.26 per fine ounce, up $US9.66 from $US1,253.60 on Thursday.
BOND SNAPSHOT AT 1630 AEST:
* CGS 5.25 per cent March 2019, 1.652pct, down from 1.668pct
* CGS 4.25pct April 2026, 2.499pct, down from 2.520pct
Sydney Futures Exchange prices:
* March 2017 10-year bond futures contract at 97.420 (implying a yield of 2.580pct), up from 97.390 (2.610pct) from Thursday
* March 2017 3-year bond futures contract at 98.180 (1.820pct), up slightly from 98.160 (1.840pct)
(*Currency closes taken at 1700 AEST previous local session, bond market closes taken at 1630 AEST previous local session)
