Global stocks bounce back as conflict concerns ease

Investor focus returned to the pending trade deal between the US and China after concerns over war with Iran receded

                                

Global stocks rebounded as concerns over conflict in the Middle East eased and focus returned to the pending US-China trade deal.

Market sentiment bounced back after US President Donald Trump said Iran seemed “ready to embrace peace” and announced fresh sanctions on the country. It suggested the US administration is not pushing for an all-out war with the Islamic republic.

Rabobank analysts wrote in a note that the apparent calm allowed markets to “focus upon more secular concerns regarding the need to generate returns in a world beset by low safe-haven yields”.

News that China’s vice premier will travel to Washington next week to sign the first phase of the trade deal with the US also helped soothe investors’ concerns.

Germany’s Dax closed 1.31 per cent higher at 13,495.06, while Europe’s Stoxx 600 was up 0.3 per cent at 419.60 in late afternoon trading, just shy of the record 419.74 it reached near the end of 2019.

All three US stock benchmarks hit intraday highs. The Dow Jones Industrial Average was trading up 0.6 per cent while the S&P 500 was 0.5 per cent higher at 3,270 in mid-day trading. The Nasdaq, which jumped 0.8 per cent at the open, compounded its gains to trade 0.9 per cent higher at 9,215.

Demand for haven assets, which soared last week on the news of the US drone attack in Iraq, eased off.

Oil continued to decline from multi-month highs, gold fell for a second day to $1,552.98 (£1,186.61, €1,396.93) an ounce and the Japanese yen dropped to a two-week low against the dollar.

Brent futures for March settlement slid 5 cents to $65.39 a barrel.

The pound fell to its lowest level in two weeks to €1.18 and below $1.31 after Bank of England Governor Mark Carney hinted at interest-rates cuts if the UK economy doesn’t rebound soon.

However, the weaker pound spelt good news for the FTSE 100 index, which closed up 0.31 per cent at 7,598.

FURTHER READING: China's vice premier to sign trade deal in Washington

FURTHER READING: Bank of England's Carney hints at interest-rate cut

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