Stock markets dip after US approves air strikes on Iraq
Stock markets have taken a hit in the wake of Barack Obama's decision to authorise air strikes on Iraq, with investors seeking safe haven assets. The price of crude has also risen to $105.76 a barrel.
According to a Pentagon spokesman, the US has conducted an airstrike on Islamic State artillery used against Kurdish forces defending Erbil.
The FTSE 100 is down 0.45 per cent, closing at 6,567, with the DAX and CAC both flat. Japan's Nikkei dropped almost three per cent, closing at 14,778, its lowest point for two months.
Obama has authorised a number of targeted air strikes against Islamic militants to protect American personnel. The US has begun to supply aid to the stranded Yezidi refugees in the north of the country. However, there was no commitment given for the deployment of ground troops.
“When we face a situation like we do on that mountain, with innocent people facing the prospect of violence on a horrific scale and we have a mandate to help – in this case a request from the Iraqi government – and when we have unique capabilities to act to avoid a massacre, I believe the United States cannot turn a blind eye,” the US President said in a late-night statement from the White House.
Furthermore, Russia's decision to impose sanctions on European agricultural and food products signalled that the crisis over Ukraine is far from over. Economists believe the move may cause upward pressure on Russian prices.
Citibank said the drop in the supply of food could push up Russia’s consumer price index by about 1.9 percentage points.
In his press conference yesterday, Mario Draghi said the ECB was still assessing the effect of sanctions on the European economy.