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Investors Seek Safety as Stocks Fall, Bonds Gain

Investors Seek Safety as Stocks Fall, Bonds GainInvestors Seek Safety as Stocks Fall, Bonds Gain

World stock markets fell while government debt prices rose as investors sought safety in low-risk assets after Turkish jets shot down a Russian warplane near the Syrian border.

The dollar fell against the traditionally safe-haven Japanese yen, helping to push oil and metals prices higher. Gold rose 1%, Reuters reported.

Travel and leisure stocks fell after the US State Department late Monday warned US citizens of the risk to worldwide travel posed by what it called increased terrorist threats. United Continental, American Airlines and Delta Air Lines all were lower in early US trading.

The warplane incident was the first time a NATO member’s armed forces had shot down a Russian or Soviet military aircraft since the 1950s. Russia said its plane had been downed over Syria.

“This has really gotten investors’ attention,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. “Investors are worried that tensions could escalate.”

Wall Street cut its losses in midday trading, however.

The Dow Jones industrial average fell 16.9 points, or 0.09%, to 17,775.78, the S&P 500 lost 5.46 points, or 0.26%, to 2,081.13 and the Nasdaq Composite dropped 25.30 points, or 0.5%, to 5,077.18.

The MSCI index of global stock markets fell 0.3%, and a broad gauge of European stocks dropped 1.3%.

Turkish shares dropped, as well, while the prospect of escalating tension between the former Cold War foes gave an additional push lower to German yields.

In US Treasuries, the 30-year yield hovered near 3%, while benchmark 10-year treasuries notes were up 6/32 in price to yield 2.23%.

The dollar index, which measures the dollar against six major world currencies, fell 0.1%. But the dollar’s weakness and escalating tensions in the Middle East helped oil prices, with Brent futures up more than 2% at $45.81 a barrel and US crude also up more than 2% at $42.70.

Gold rose, recovering from near six-year lows after the warplane news. Spot gold peaked at $1,080.51 and was up 0.7% at $1,077.30 an ounce.

Financialtribune.com