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London open: potential strike on Syria worries investors early on

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Stocks declined on Wednesday morning on concerns over an imminent Western military intervention in Syria.
London open: potential strike on Syria worries investors early on

Investors are choosing to scale back positions ahead of a number of ‘risk events’ later on in the week.

The Senate Foreign Relations Committee last night gave the green light on a US attack on Syria, saying that the use of force “reflects the will and concerns of Democrats and Republicans alike”.

The backing of the Committee “reminded investors that the potential for war is still lurking”, according to Financial Trader Shavaz Dhalla from Spreadex.

This comes ahead of the crucial vote in Congress next week on President Barack Obama’s call for action against the Bashar al-Assad regime which he claims is responsible for the deadly chemical weapons attack against the Syrian people in August.

Dhalla said: “Many now believe that if a strike is approved, this would likely occur in a much smaller scale and involve a fewer number of countries than initially expected. Despite this, the possible legal repercussions from Syria’s allies, which include China and Russia, if the strike does happen without UN approval is still troubling investors.”

Traders will also be cautious today ahead of three central-bank meetings tomorrow from the Bank of Japan, Bank of England and the European Central Bank.

These will be followed by the all-important US jobs report on Friday which will be a large factor in the Federal Reserve’s decision on whether or not to adjust current stimulus measures later this month.

Airline peers easyJet and IAG were flying lower this morning after a gloomy outlook by Ryanair on the back of the hot weather in Northern Europe over the summer. The company scaled back its full-year profit guidance after worse-than-expected bookings but said that it could even fail to meet these forecasts if fares and yields continue to weaken over the coming winter.

Hargreaves Lansdown fell despite reporting record annual figures this morning. Full-year pre-tax profit rose 28% to £195.2m as the financial services company took on more clients and increased assets under administration by 38% rise in AuA to £36.4bn. Weighing on the price this morning could be Morgan Stanley’s downgrade of the ‘Diversified Financial’ sector to ‘neutral’.

TUI Travel, Resolution and BHP Billiton were also heavy fallers this morning after going ex-dividend, meaning that from today new investors won’t be able to get their hands on their latest dividend payments. Others that went ex-dividend on the blue-chip index include Admiral, Aggreko, ARM Holdings, IMI, Land Securities, Serco Group and Shire.

Chemicals group Croda International also went ex-div today but was trading higher after Exane BNP Paribas upgraded its rating on the stock to ‘outperform’.

British Land fell after saying it is set to purchase 50% of 430,000 square-foot SouthGate retail space in Bath by paying current owner Multi Southgate £101m.

Source: ShareCast

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