Stocks will be under pressure this week over concerns that Western governments are likely to take some form of retaliatory measures against Syria.
Sentiment has already weighed on markets in the US as Secretary of State John Kerry said on Monday that Syria would be held accountable for the “moral obscenity” of the chemical weapons attack that has killed well over a thousand.
Traders fearing the macroeconomic and geopolitical fallout of a widening Syrian conflict are moving funds into perceived safe havens such as Treasuries and Gold, the latter having rediscovered some of its lustre, reclaiming the $1,400 level for the first time since early June.
On the economic front, a recent batch of US economic data depressed bond yields.
Some house sale figures have pointed to a slowing of that market, while investors were taken aback on Friday by a weak durable goods survey.
To what extent such reports are responsible for the stock market’s latest dip is difficult to discern.
Some traders argue the soft data reduce the chances of the Federal Reserve starting in September to trim its supposedly market-supportive asset purchase programme (QE), and are therefore potentially bullish.
However, renewed worries about US debt was also hitting stocks after the US Treasury Secretary said the Government would reach the debt ceiling by mid-October unless Congress agrees to raise the limit.
In the UK, perhaps one of the most interesting events this week will be the Bank of England Governor Mark Carney’s speech on Wednesday. It will come at a time when many observers are expecting the monetary authority to reinforce its ‘forward guidance.’