World Economy

Global Shares Gain as Tensions Cool

This week, the mood has been different as more emollient language and an intervention by China has helped ease concerns of an imminent confrontation while stock markets around the world remained buoyed
Inside view of Tokyo Stock ExchangeInside view of Tokyo Stock Exchange

Stock markets around the world remained buoyed Tuesday by a seeming further easing in tensions between the United States and North Korea, which has helped investors rediscover their appetite for riskier assets following last week's aversion.

In Europe, France's CAC 40 was up 0.5% at 5,146 while Germany's DAX also rose 0.2% to 12,199. Britain's FTSE 100 was 0.6% higher at 7,396. Wall Street was poised for a solid opening too with Dow futures and the broader S&P 500 futures up 0.3%, news outlets reported.

The pan-European STOXX 600 was up 0.1% after rallying 1.1% on Monday, with most major European benchmarks and industries in positive territory. Financial stocks were among the strongest gainers, with Standard Life rising 2.6% and Old Mutual adding 1.6% in London and Allianz rising 0.5% in Frankfurt. Lender Societe Generale added 0.5% in Paris. The euro-region blue-chip STOXX 50 index gained 0.1%. The FTSE 100 in London added 0.3%.

In economic news, the UK annual inflation rate unexpectedly held steady at 2.6%, a report from the Office for National Statistics showed. Economists in an poll had predicted a reading of 2.7%.

In Asia, Japan's benchmark Nikkei 225 gained 1.1% to finish at 19,753.31. Australia's S&P/ASX 200 added 0.5% to 5,757.50. Hong Kong's Hang Seng slipped 0.3% to 27,174.96, while the Shanghai Composite index was up 0.4% at 3,251.26. South Korea's markets were closed for a national holiday, AP reported.

Taiwan, was also outperforming on Tuesday. The Taiex followed a 1% decline with a 0.8% advance amid a rebound in big tech stocks.

The gains in Asian stocks Tuesday also came despite US President Donald Trump launching an inquiry into intellectual property practices concerning China. IG market analyst Jingyi Pan says the impact of that probe on Asian markets is hard to discern at the moment.

In Hong Kong among the biggest gainers this morning were Industrial & Commercial Bank of China, China Construction Bank and Bank of China, all up between 2% and 3%. Web giant Tencent, the biggest component in Hong Kong’s Hang Seng Index, was up almost 1%.

Easing Concerns

The main driver in markets over the past couple of weeks is related to North Korea's nuclear program, which prompted Trump to threaten Pyongyang with potential military action. That caused a sizeable reverse across global markets last week and an accompanying rally in supposedly safe haven assets such as gold.

This week, the mood has been different as more emollient language and an intervention by China has helped ease concerns of an imminent confrontation. On Tuesday, Pyongyang said North Korean leader Kim Jong-un was briefed on his military's plans to launch missiles into waters near the US territory of Guam. But the comments also appeared to signal a path to defuse the deepening crisis with Washington, holding out the possibility that friction could ease if the US made some gesture that Pyongyang considered a move to back away from previous "extremely dangerous reckless actions".

"The risk rebound continues in financial markets on Tuesday, as tensions between the US and North Korea appear to ease and investors gradually unwind their safe haven trades from last week," said Craig Erlam, senior market analyst at OANDA.

"Gold—the ultimate traditional safe haven—is on course for a second day of losses and is currently trading around $1,273, finding some support around the level it ran into difficulty around a couple of weeks ago."


The British currency suffered another reverse on Tuesday after inflation figures came in lower than anticipated. By midday in London, it was down 0.6% at $1.288, while the euro rose 0.3% to 0.911 pound.

The dollar was recently 0.7% higher against the yen. The WSJ Dollar Index, which measures the greenback against a basket of currencies was up 0.2%.

The 10-year US Treasury yield rose to 2.245% Tuesday from 2.217% Monday.

Meanwhile, US crude oil lost 21 cents to trade at $47.38 a barrel, while Brent crude, the international standard, slipped 34 cents to $50.39 a barrel in London.


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