After adopting a wait and see attitude for several days after the Syrian air strikes, markets turned defensive last night.  There were significant moves in safe haven assets such as gold, Yen and US Bonds. While there is no immediate threat to international financial flows or global commerce, the assertive positions of the US, Russia and North Korea has seen markets begin to take insurance against the possibility that geo political risks will escalate.

The US stock market closed broadly unchanged last night but this was only after rallying off lows that saw it break below the trading range that’s been firmly in place so far this month. Despite the firm close, this downside break indicates a degree of investor brittleness over the geopolitical situation.  At the end of the day, US stocks appeared to give greatest weight to positive expectations for the upcoming profit reporting season, delivering a neutral lead for the local market.

While global equity markets have been somewhat stalled   this week, the Australian  market has outperformed with solid gains over the past 2 days and a clear break into new high ground for the year. A key question for traders will be whether this independent upward momentum continues  in the face of global nervousness today.

The oil market continued to rise in advance of this week’s US production data, suggesting that energy stocks will again be a source of support for the ASX 200 index.