The Syria crisis, and the likely response of the United States, dominates the headlines again today, and the markets are taking notice. President Obama hosted a meeting with Congressional leaders today and received the full support of Republican Congressional leader John Boehner for an attack on the country.
In response to the growing likelihood of a strike on Syria, the price of crude oil had increased by close to 1 percent on today’s market, while gold rose by more than 1 percent. The stock market was restrained by the talk about Syria, the Nasdaq and S&P 500 made anemic gains, while the Dow Jones Industrial Average fell by a fraction.
Oil boosted as bears get louder
With the United States possibly headed for war, stock market bears are depressing returns. The market has been suffering from a general malaise for the last three months as investors expect the Federal Reserve to reduce its quantitative easing program. The possibility of market action in Syria has shaken investors even more.
Investors are left looking for safety; in this case oil and gold appear to hold the keys. The price of gold has increased by more than 7 percent in the last 30 days.
Syria heats up
After a meeting with President Obama on the Syrian crisis, House speaker John Boehner and House leader Eric Cantor both pledged their support for military action in Syria. The Republican-led Congress is a challenge for the Obama administration as it tries to secure wide support for a military strike.
Votes on military action are expected to take place in the House and the Senate next week. President Obama said, “What we are envisioning is something limited. It is something proportional. It will degrade Assad’s capabilities. At the same time we have a broader strategy that will allow us to upgrade the capabilities of the opposition.”
That leaves the exact character of the potential assault unclear, spooking markets as the United States heads for another potential war in the Middle East. If President Obama can secure the support of Congress, it is likely that he will go ahead with some kind of military action, without the support of the United Nations Security Council. The United Nations regards any wars fought without approval of the Security Council, that are not fought in self defense, to be illegal.