Global equity markets slid on Wednesday as U.S. President Donald Trump warned Russia that missiles “will be coming” in Syria after a suspected chemical attack, and oil hit its highest since 2014 after Saudi Arabia said it intercepted an air strike over Riyadh.
The fallout from new U.S. sanctions on Moscow have rattled investors and fears of military action were stoked after one of Russia’s ambassadors reiterated it would shoot down any U.S. missiles fired at Syria.
Trump, who has criticized Russia for standing by Syrian President Bashar al-Assad, shot back in a message on Twitter on Wednesday.
“Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and ‘smart!’,” he wrote in the post. “You shouldn’t be partners with a Gas Killing Animal who kills his people and enjoys it!”
In response, Russia’s Foreign Ministry said in a Facebook post that “smart missiles should fly towards terrorists, not towards the lawful government”.
The Dow Jones Industrial Average fell 129.86 points, or 0.53 per cent, to 24,278.14, the S&P 500 lost 5.99 points, or 0.23 per cent, to 2,650.88 and the Nasdaq Composite added 8.66 points, or 0.12 per cent, to 7,102.96.
Facebook and Netflix helped to pare losses in the S&P 500 and Nasdaq.
Facebook Inc shares were up 1.5 per cent as Chief Executive Mark Zuckerberg gave a second day of testimony before the U.S. Congress. Netflix shares climbed more than 3 per cent following a Goldman Sachs target price increase $60 above Wall Street’s median price target of $300.
Canada’s main stock index sat flat as escalating tensions between the United States and Russia over Syria pushed up gold and crude oil prices.
Suncor Energy Inc., Canadian Natural Resources Ltd. were up over 1.5 per cent and provided the biggest boosts to the sector.
Shares of Barrick Gold Corp and Goldcorp Inc. rose more than 2.5 per cent and lifted the materials sector, which sat up 1 per cent.
Traditional safety play gold rose for a fourth session, with spot gold advancing 1 per cent to $1,352.62.
At 1:43 p.m. ET, the Toronto Stock Exchange’s S&P/TSX Composite Index was up 14.61 points, or 0.09 per cent, to 15,276.75.
The pan-European FTSEurofirst 300 index lost 0.60 per cent and MSCI’s gauge of stocks across the globe shed 0.16 per cent.
Emerging market stocks rose 0.14 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.04 per cent higher, while Japan’s Nikkei lost 0.49 percent.
“It feels like there are expectations that the U.S. is going to take some action against Syria,” said Phil Blancato, chief executive of Ladenburg Thalmann Asset Management in New York. “The market, I don’t believe, has priced one yet.”
Investors’ nerves were rattled just a day after worries eased on a more conciliatory tone on trade between Trump and Chinese President Xi Jinping.
Meanwhile, oil prices hit their highest in more than three years after Trump’s latest comments despite bearish inventory numbers.
U.S. crude rose 2 per cent to $66.82 per barrel and Brent was last at $72.07, up 1.45 percent on the day.
Oil prices began to climb on Trump’s warning over Syria, then rallied further on a report that Saudi Arabia’s air defense forces intercepted a missile over Riyadh, the capital.
The dollar fell against the yen, hitting a two-week low over lingering worries of a trade war with China and domestic scandals swirling around Trump.
The dollar index fell 0.08 per cent, with the euro up 0.12 per cent to $1.2369.
The Japanese yen strengthened 0.33 per cent versus the greenback at 106.85 per dollar, while Sterling was last trading at $1.4183, up 0.08 per cent on the day.
The Russian ruble slumped as much as 2.5 per cent against the dollar and even more versus the euro.
In metals, aluminum prices extended their rally to a sixth straight session, hitting an 11-week peak amid persistent worry about shortages after the United States imposed sanctions on Russia’s Rusal.
Spot gold added 1.2 per cent to $1,355.21 an ounce. U.S. gold futures gained 1.00 percent to $1,359.30 an ounce as safe-haven demand sharpened.
Palladium, which has also benefited from expectations that sanctions on Russia could hurt supply, rose further after climbing nearly 6 percent in the past two days.
Some metals entered the red. The London Metal Exchange and the CME Group said they were taking action to restrict aluminum brands of Rusal, one of the world’s biggest producers, on their exchanges.
“There’s a lot of panic and uncertainty. Buyers are scrambling to try to replace where they can, to plug the gap left by not having Russian-origin metal,” said Robin Bhar, head of metals research at Societe Generale in London.