Syria - is it built into markets?

veryintrigued

Losing a few quid hardly seems relevant compared to what is happening, and could develop, for the people in that part of the world.

But my question is - is the seemingly developing uncertainty built into the world markets or will those markets closer to home be impacted in the next few weeks?

Am sure that sages on here know, where previous situations like this, had any impact?

lvader

It looks like we are being softened up for conflict, just like the WMD reports from Iraq before the war there. The market charts look ripe for a fall anyway so I'm sure any excuse will be siezed on.

atush

yeah, govt killing thousands of people is being 'softened' up.

Could have been softer, faster if we weren't so afraid of Putin.

I am not invested in Syria per se. It can and does affect surrounding areas, but Turkey has made me quite a bit over the last decade. If there is a correction, i'll ride it out.

lvader

atush wrote: »

yeah, govt killing thousands of people is being 'softened' up.

Could have been softer, faster if we weren't so afraid of Putin.

I am not invested in Syria per se. It can and does affect surrounding areas, but Turkey has made me quite a bit over the last decade. If there is a correction, i'll ride it out.

It's effectively civil war, we don't know who the enemy is or who is doing what. There are clearly some quite nasty people on both sides but I'm not sure that is a reason to wade in. There have been in the region of a million deaths as a result of the Iraq war so if that is our idea of helping, the Syrians are better off without us.

helifox

For the cold blooded who can consider such things...without wanting to join a revolutionary movement, maybe Chemring shares will bounce back now... They specialise in making decoy flares for aircraft wishing to avoid missiles.

bowlhead99

veryintrigued wrote: »

my question is - is the seemingly developing uncertainty built into the world markets or will those markets closer to home be impacted in the next few weeks?

Am sure that sages on here know, where previous situations like this, had any impact?

The uprising started more than two years ago. There were some pretty serious bombings in Damascas last summer. By Jan this year both government/official sources and the UN put casualties at >50k, and it has probably doubled or more since. In the same timescale the Egyptians also had an uprising, kicked out the president, elected a new one, kicked him out too. Plenty of bloodshed to go around.

FTSE100 is up 10%+ since early Jan, Wall St 15%+, Nikkei 30%+. But it is naive to think that those in the markets are unaware of the political instability. If relations between those in the middle east were all sweet, markets would probably be higher as markets don't like uncertainty, and there is clearly some. Everything from political unrest to earthquakes to elections around the world affects markets to an extent.

If there's a world war three, markets will fall. If there isn't and everyone shakes hands and makes friends, markets will rise, all things being equal. However, all things are not equal from day to day and there are, for the moment, plenty of bigger things going on.

UK markets were closed today but the US was not (and of course both markets have already had some time to react to last week's violence). The S&P and Dow both dropped a bit while Nasdaq was flat. Maybe some of that is to do with politicians going on TV late in the trading session and saying the US will hold Syria's government to account over using chemical weapons. Some of it will be a report saying the US will hit its debt limit (again) in October. Everything gets exaggerated at the moment as traded volumes are lower due to holidays etc. But generally markets are down there (and here) over the last three weeks or so because 'the market' is trying to price in the consensus view that the Fed will cut back its $85bn a month bond-buying.

So, the QE and low interest environment that has helped markets double since the credit crunch is going to go away at some point (some of which is priced in, some is not, because we don't know how much how fast will be changed). That has great potential to hit every asset class.

The fact that the Russians don't want the Americans to go storming into Syria blowing things up based on what type of weapons are being used over there, is a source of 'uncertainty' but not nearly as much as the fact that we don't quite know how far or how fast the markets will fall after the removal of developed market government stimulus, or when that will start and to what extent.

The short answer to your question is yes, the current consensus expectation of where the stock market should be, given all the known knowns and the known unknowns and the unknown unknowns, is exactly where it is. The price of everything on the market is what supply and demand says it should be, roughly, as if people thought it should be higher or lower they would buy more or sell more until it was.

So, in a sense the current knowledge and predictions and projections about world events, is definitely already 'built into world markets'.

However, this doesn't mean they couldn't move significantly in future. For example, if you think oranges are going to have a good crop this year and someone else thinks they will have a bad crop this year, you will expect oranges to be cheap and he will expect them to be expensive. Based on supply and demand, the price for buying and selling to each other for future delivery, will be somewhere in the middle, representing an average crop. Of course, if we then have anything other than an 'average crop' representing the exact average of your views - i.e. the good forecast or the bad forecast comes true - one of you will be proven right and make more money off the trade than the other.

In the same way, the market has set an expectation for what impact future developments in Syria and any number of other political hotspots will have on future equity and bond markets, and priced it in. But if Syria becomes more or less of a big deal than the expectation the market has for it, the price will need to move one way or the other accordingly.

At present, the markets are not expecting a nuclear winter in the middle east region but it's a fair bet that the possibility has been acknowledged by some, and therefore that's in the price. If it happened there would be a lot of people on the wrong side of the trade, because most people expect it won't happen.

DiggerUK

.......it's just a deeply meaningful phrase, that has no meaning at all.

Markets are abstract phenomena that tell the world what is, not the other way round. To say that market players make allowances for what is round the next bend is like saying that markets can be predicted.......and that is just tosh.
..._

atush

we don't know who the enemy is or who is doing what.

What a load of twaddle.

We know perfectly well who is using chemical weapons, and it isn't the rebels. How ever nasty they might be. And however much they'll end up hating the west (if they already don't as they have been begging for help for 2 years) just like all the other countries that had recent civil actions like Egypt and Libya.

you believe that cr*p, then I have a bridge to sell you, cheap.

IronWolf

It wont have any real affect on western markets imo. The country is already at civil war, so it escalating further probably wont have much impact locally either. I mean how can things get any worse for Syria?

black_taxi_2

plenty villages,towns are ghost towns,massive tragedy,to think Syria were with the west gulf war,the PM,hague seam to have war fever,i dispair

coastline

Yesterday there was a sharp sell off in the USA in late trading..

http://www.investing.com/analysis/s-p-500-reacts-to-news,-shifts-to-a-negative-mindset-181149

Today we've seen the FTSE react or adjust to this sell off ...but 0.5% down so far isnt a major move...more detail is needed in the days ahead..
In recent decades before any conflict there has been a sharp sell off where markets have gone down for 10-14 days until the first bomb is dropped...then a rally.
Wether the rally signals a bottom is anyones guess...