Israeli test of a missile system in Mediterranean sparked heavy selling on regional markets
Middle East markets may be volatile on Wednesday after the United States moved a step closer to launching military action against Syria.
An Israeli test of a missile system in the Mediterranean sparked heavy selling on regional markets on Tuesday, although these declines could draw in bargain hunters to sold-off stocks.
Leaders of the U.S. Senate Foreign Relations Committee have reached an agreement on a draft authorization for the use of military force in Syria, paving the way for a vote by the committee on Wednesday. However, the draft is much narrower than the request made by Obama and includes a provision barring the use of U.S. troops on the ground.
"The game changes a little bit now - we will have more volatility in the markets and it will be closely linked to Syria news flow," says Sebastien Henin, portfolio manager at The National Investor.
"But we can't say the uptrend won't be there anymore. Even if we have a U.S. intervention, it should be limited in terms of duration, geography and military action."
Markets in UAE, Qatar and Saudi Arabia hit multi-year peaks in recent weeks before retreating due to the escalating conflict in Syria.
Global cues are also negative, with Asian stocks snapping a four-day winning streak on Wednesday and safe assets like gold consolidating chunky overnight gains.
Brent crude held above $115 a barrel on Wednesday, close to its highest in almost a week, as U.S. lawmakers' support for military action against Syria rekindled worries over the possible impact on oil supply from the Middle East.