Last week, stock prices on global exchanges sharply fell as investors are uncertain about a possible military attack by the U.S. on Syria, as well as the uncertainty regarding the reduction of the Fed’s stimulative monetary measures.
On Wall Street last week, the Dow Jones weakened by 1.3 percent to 14,810 points, while the S&P 500 slid by 1.8 percent to 1,632 points, and the Nasdaq index fell by 1.9 percent to 3,589 points.
The decline in stock prices for the fourth consecutive week is a result of investors’ concerns about a possible attack by U.S. forces on Syria, as U.S. officials have stated that the Syrian government should be punished for the use of chemical weapons.
“The attack on Syria is already priced into stock prices, but an escalation of the crisis could trigger accompanying consequences that investors are not fully aware of, such as complications from a possible rise in oil prices,” says Jim McDonald, a strategist at Northern Trust Global Management.
Due to fears that the Syrian crisis will disrupt oil supply from the Middle East, the prices of ‘black gold’ reached their highest levels in six months last week.
While this spurred a rise in stock prices of oil companies, many other sectors, such as airlines, found themselves under pressure as rising fuel prices increase their operating costs.
The construction sector was also among the losers after it was reported that existing home sales in July in the U.S. fell for the second consecutive month, and significantly more than expected.
“These data show that the rise in real estate prices and mortgage interest rates has begun to erode sales, which is disappointing,” says McDonald.
