While you were sleeping Support rises for Syria strike

Wednesday 4th September 2013

Equities are higher after US President Barack Obama's efforts to seek congressional support for military action against Syria appeared to be gaining traction and on more signs of the economic recovery.

John Boehner, Speaker of the US House of Representatives, and Eric Cantor, the house majority leader, both said they will support President Barack Obama's call for military action against Syria.

In late afternoon trading in New York, the Dow Jones Industrial Average eked out a 0.15 percent gain. The Standard & Poor's 500 Index rose 0.38 percent, while the Nasdaq Composite Index gained 0.64 percent. US markets were closed yesterday for the Labour Day holiday.

"The worry is Syria could turn ugly," Jeffrey Saut, chief investment strategist at Raymond James Financial in St. Petersburg, Florida, told Reuters.

Indeed, oil prices rose. West Texas Intermediate crude for October delivery increased US$1.01, or 0.9 percent, to US$108.66 a barrel on the New York Mercantile Exchange.

"The market is processing what appears to be a slow grind to military action against Syria," said John Kilduff, a partner at Again Capital, a New York hedge fund that focuses on energy, told Bloomberg News.

Concern about Syria took away from the economic data supporting the view of a sustained pick-up in the US recovery.

The Institute for Supply Management's index rose to 55.7 in August, the strongest since June 2011, and up from 55.4 in July.

Separately, Markit's final US Manufacturing Purchasing Managers Index fell to 53.1 last month, from 53.7 in July, and down from an earlier flash estimate of 53.9. Still, new orders increased at a solid pace, Markit said.

"The downturn in the headline PMI is a disappointment, suggesting that there is a risk that the goods-producing sector is stalling. However, a more encouraging picture emerges if we look at the details," Chris Williamson, chief economist at Markit, said in a statement. "In particular, inflows of new orders-a useful guide to future production-are growing at the fastest rate for seven months."

Shares of Microsoft fell, last down 5 percent and the biggest drag on the Dow, after it agreed to buy Nokia's mobile-phone business for US$7.2 billion. Shares of Verizon Communications retreated, last down 2.7 percent and the second-largest drag on the Dow, on its deal to buy Vodafone's 45 percent stake in Verizon Wireless for US$130 billion

In Europe, the Stoxx 600 Index fell 0.4 percent from the previous close. The UK's FTSE 100 Index dropped 0.6 percent, while Germany's DAX and France's CAC 40 both fell 0.8 percent.

BusinessDesk.co.nz

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