Shares rebound, oil prices retreat despite US-Iran woes

BANGKOK (AP) — Global stocks rebounded yesterday following modest gains on Wall Street, despite caution over rising tensions between the United States (US) and Iran.

US officials were bracing for Iran’s response to the killing by a US drone of its most powerful General, Qassem Soleimani. Noting heightened levels of military readiness in the country, Washington was preparing for a possible “tit-for-tat” attack on an American military leader.

In Europe, Germany’s DAX advanced one per cent to 13,252.48 while the CAC 40 in France climbed 0.6 per cent to 6,052.34. Britain’s FTSE 100 edged 0.1 per cent higher to 7,585.16. Futures for the S&P 500 and the Dow Jones Industrial Average edged 0.2 per cent higher.

“The positive sentiment is likely to continue for the remainder of the day as the underlying drivers of the stock market rally, the search for yield and global economic recovery, reassert themselves,” Jeffrey Halley of Oanda said in a commentary.

“Only geopolitical headlines surprises from the Middle East are now likely to derail the rally.”

A woman walks by a securities firm in Tokyo. PHOTO: AP

In Asia, most benchmarks rose, with Japan’s Nikkei 225 index adding 1.6 per cent to 23,575.72. Hong Kong’s Hang Seng picked up 0.3 per cent to 28,322.06, while the Shanghai Composite index gained 0.7 per cent to 3,104.80. In South Korea, the Kospi rose 1 per cent to 2,175.54. Australia’s S&P ASX 200 climbed 1.4 per cent to 6,826.40. Shares fell 0.6 per cent in Taiwan but rose in most of Southeast Asia.

Gold was steady yesterday after touching its highest price since April 2013 on Monday as investors sought safety amid fears the antagonisms could lead to war. It was down USD0.40 at USD1,568.40 per ounce.

Gold has historically performed well in times of military conflict and has climbed more than USD40 since before Soleimani’s killing.

Oil prices gave up some of their recent big gains yesterday, with benchmark US crude dropping USD0.35, or 0.6 per cent, to USD62.92 per barrel in electronic trading on the New York Mercantile Exchange. It gained USD0.22 to USD63.27 per barrel on Monday.

Brent crude, the international benchmark, lost USD0.45, or 0.7 per cent, to USD68.46 per barrel. On Monday it added USD0.31 to USD68.91 per barrel.

In currency trading, the dollar rose to JPY108.46 from JPY108.33 on Monday. The euro slipped to USD1.1185 from USD1.1194.

Apart from waiting for next steps in the clash between the US and Iran, several big economic reports are on the schedule this upcoming week that could move markets. The headliner is Friday’s jobs report from the government.

Solid jobs growth has helped support the US economy, even as trade wars hurt manufacturing around the world. Economists expect Friday’s report to show that employers added 155,000 jobs last month.

The healthy job market is one of the reasons the S&P 500 soared to its second-best showing in 22 years in 2019.

Big moves by central banks around the world to shield the economy from the pain of trade wars also were big factors.