Investor sentiment turned bearish Friday morning in the wake of the U.S. President Donald Trump's decision to launch a military air strike against a Syrian airfield. But markets should not lose confidence: they should view the event simply as a "test" – albeit the first of many – within an increasingly fraught geopolitical environment, analysts told CNBC.
"We have to recognise that it is an incident, so we see no escalations between the powers. There is really no reason to go into a huge risk off wave," Didier Duret, global chief investment officer at ABN Amro Private Banking, said Friday.
"We take the assumption that Mr Trump is unpredictable but so far from what we have seen in reality there is some form of predictability that comes through. I think a reaction to an incident is simply business as usual for the commander in chief."
Markets moved lower in the aftermath of President Trump's decision late Thursday evening, when he ordered the launch of 59 Tomahawk missiles at Syria in response to an alleged chemical attack which claimed more than 70 lives earlier this week. Stocks slumped and the U.S. dollar dropped against the yen during Asian trading Friday. Meanwhile, safe haven bonds, gold and oil prices jumped higher in response.
However, Duret said President Trump's sudden move should be viewed as par for the course of the new administration and markets should not be shaken indefinitely.
"It is a test to the residents of the market. We have low volatility; we have very strong economic conditions and very stable financial conditions, so it really represents a test to see whether we can move from the geopolitical point of view."