Written by Mark Jones
LONDON (Reuters) – Europe’s major stock and currency markets opened modestly higher this week as oil and bond prices fell as investors tempered concerns about the Middle East following Iran’s attack on Israel over the weekend. Ta.
Tehran’s attack, which involved more than 300 missiles and drones and was the first foreign attack on Israel in more than 30 years, sold off sharply on Friday as major powers urged restraint. There was an element of relief in the market’s movements on Monday.
Oil prices, which rose 10% last month as tensions escalated, fell 1%, the Israeli shekel rose 1% and the pan-European STOXX 600 index rose 0.3%, albeit led by defense stocks.
Gold, which has been at record highs for weeks, rose 0.3%, but the dollar and ultra-safe government bonds rose. [GVD/EUR] All the funds that asset managers often turn to when geopolitical tensions are high were low.
Robert Alster, chief investment officer at Close Brothers Asset Management, said he was hopeful that diplomatic efforts by the United States and Gulf states would prevent further escalation of the Middle East problem.
Emphasizing that oil prices have yet to break above the high of $96 a barrel reached in September, Ulster said, “There is a general feeling (among investors) that the situation is not going to escalate.” I have a point of view,” he said. “There was retaliation, but hopefully now we can move forward.”
It’s also another busy week of economic data and corporate earnings, and the start of the spring meetings of the International Monetary Fund, which steers the world’s narrative.
One of those data points is later U.S. retail sales. The dollar index against a basket of six other currencies was steady at 105.92, just below Friday’s 5-1/2-month high of 106.11.
However, the yen has fallen to a 34-year high against the Japanese yen, due to growing expectations that US interest rates will remain high for a long time due to persistent inflation and the Japanese government not yet rushing to intervene in the foreign exchange market. has been updated.
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Following a sharp selloff on Wall Street on Friday, U.S. stock futures rose on the back of waning expectations for interest rate cuts and disappointing bank earnings. [.N]
However, MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 0.7% overnight as tensions spread across the region. Japan’s Nikkei Stock Average fell 1%, and Australia’s S&P/Australian Stock Exchange 200 index fell nearly 0.5%.
The region is under tension due to the outbreak of war between the Middle East’s biggest enemies, Iran and Israel, and the threat of involving the United States. US President Joe Biden has warned Israeli Prime Minister Benjamin Netanyahu that the US will not participate in a counterattack against Iran.
“The operation is not over yet,” Israel said.
Oil prices show traders are almost pricing in a retaliatory attack from Iran, which could lead to tougher sanctions on Iranian oil. This pushed Brent crude oil futures to $92.18 a barrel last week, the highest level since October.
Monday’s 1% decline sent Brent crude below $90 per barrel and US West Texas Intermediate crude futures to just under $85 per barrel, while gold was slightly higher at $2,351 per ounce. Ta. [O/R]
Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management, said: “The market is in a wait-and-see situation right now as we wait to see how Israel reacts and how Iranian proxies react.” ” he said.
(Reporting by Mark Jones; Additional reporting by Lei Wee in Singapore; Editing by Susan Fenton)
