Global stocks re­bound as fears on Iran ease, but in­vestors on alert

Muscat Daily - - BUSINESS -

Lon­don, UK – Global eq­ui­ties re­bounded while oil and safe­haven gold re­treated on Tues­day as fears of a Mid­dle East con­flict abated, but in­vestors re­mained on alert for any es­ca­la­tion af­ter the US as­sas­si­na­tion of a top Ira­nian gen­eral.

With few ma­jor de­vel­op­ments in the cri­sis sparked by the killing of Qasem Soleimani last week, traders were able to turn their at­ten­tion back to the global eco­nomic out­look and the USChina trade deal sign­ing planned for Jan­uary 15.

Wall Street pro­vided a pos­i­tive lead, with all three main in­dexes re­vers­ing early losses to end in the green on Mon­day as traders wel­comed strong ser­vice sec­tor data from the US, Europe and Bri­tain that pro­vided hope that the world­wide growth slow­down was eas­ing.

In Euro­pean late morn­ing deals, Lon­don stocks rose 0.1 per cent, Paris gained 0.6 per cent and Frank­furt climbed 1.0 per cent.

Asian mar­kets were broadly higher, with Tokyo end­ing 1.6 per cent up, Hong Kong adding 0.3 per cent and Shang­hai rising 0.7 per cent.

“Mar­kets were in a hap­pier mood on Tues­day as it looked like in­vestors’ fears had sub­sided over an es­ca­la­tion of ten­sions be­tween the US and Iran,” said Russ Mould, in­vest­ment di­rec­tor at stock­bro­ker AJ Bell.

“Stocks in Europe and Asia ral­lied, with su­per­mar­kets, to­bacco and airlines among the sec­tors in de­mand on the Lon­don mar­ket.”

Ob­servers said the lim­ited im­pact on mar­kets was also be­cause the stand­off was not ex­pected to have a mas­sive im­pact on global growth.

The shift back to riskier as­sets saw oil prices re­treat, hav­ing ral­lied al­most 7 per cent in the pre­vi­ous two days. Gold slipped from six and a half year highs.

“Putting to one side the heat and noise of the events of the last few days, and in the ab­sence of fur­ther vi­o­lence and es­ca­la­tions, the re­al­ity is that very lit­tle has changed,” said CMC Mar­ket an­a­lyst Michael Hew­son.

But an­a­lysts warned that the mood could change in a split sec­ond, with Don­ald Trump warn­ing of a ma­jor re­tal­i­a­tion if Iran car­ries out any re­venge at­tacks.

“It’s wait-and-see mode here,” said Steve Chi­avarone, at Fed­er­ated In­vestors. “How much, if at all, do things es­ca­late with Iran and does it ul­ti­mately im­pact the global eco­nomic out­look? Right now, not so much. Could it change? Sure.”

The strike on such a high-pro­file mem­ber of the Ira­nian regime has also raised the ques­tion of when and how - not if - Tehran will re­tal­i­ate, which ex­perts say will likely con­tinue to sup­port crude.

“The US strike in Iraq last week of­fers up a spec­u­la­tor’s de­light on the be­lief that Iran will need to muster up a suf­fi­cient re­sponse to mo­bilise lo­cal na­tion­al­ist sup­port,” said Ax­iTrader’s Stephen Innes.

He pointed out, how­ever, that there was a lot of pro­duc­tion ca­pac­ity around the world, in­clud­ing US shale, that could pre­vent prices from soar­ing.


FTSE100 share price in­for­ma­tion is be­ing dis­played on an il­lu­mi­nated ro­tat­ing cube in the atrium of the Lon­don Stock Ex­change Group Plc’s of­fices in Lon­don, UK on Jan­uary 2

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