LONDON: The main stock markets in Europe and the United States rose on Monday but oil prices fell as markets tracked the Israel-Hamas conflict.
Asian equity markets sank having caught up with losses in Europe and the United States on Friday as oil prices soared nearly six percent.
The safe haven dollar lost some strength on Monday.
Markets had taken fright on Friday at the possibility that a ground invasion by Israeli troops into northern Gaza, after a warning to civilians to evacuate, could spark a wider conflict.
“The worry was that the Israel-Hamas War would escalate and potentially turn into a wider conflict over the weekend when the stock market was closed for trading,” said Briefing.com analyst Patrick O’Hare.
“That did not happen, so there is a measure of relief this morning,” he added.
This sense of relief also saw oil prices slide after reaching nearly one-week highs.
“The lack of further escalation over the weekend has helped to cap the gains thus far, while reports that the US is easing restrictions on Venezuelan oil is helping to limit the upside,” said Robert Hewson, chief market analyst at CMC Markets.
Investors are also turning their attention to corporate earnings as companies begin to report third quarter results.
“The earnings season will be at full speed this week… (but) will likely remain under the shadow of mounting geopolitical tensions in the Middle East,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
US Secretary of State Antony Blinken has returned to Israel after talks in six Arab states, hoping to coordinate efforts against Hamas while finding ways to alleviate Gaza’s humanitarian crisis.
Four days after he paid a lightning visit to Tel Aviv to show solidarity with Israel, Blinken flew back and went straight to talks with Prime Minister Benjamin Netanyahu at his Jerusalem office.
As Israel prepares what is expected to be a major ground operation in the Gaza Strip, Blinken was later to meet Netanyahu’s security cabinet.
“The key uncertainty is whether a ground operation risks widening the conflict, with markets focused on whether Iran and its allies are drawn into the conflict,” said National Australia Bank’s Tapas Strickland.
Adding to the unease was news the White House will tighten rules on Chinese access to semiconductor chips and chip-making equipment, maintaining a long-running security standoff between the superpowers, despite moves to ease tensions.
Traders will be keeping a close eye on speeches this week by several Federal Reserve decision-makers, including boss Jerome Powell, hoping for some idea about their plans for interest rates.
The talks come after a number of officials in recent weeks indicated they were happy to keep US borrowing costs on hold, soothing concerns about more tightening that some observers fear could flip the world’s biggest economy into recession.
Key figures around 1530 GMT
New York – Dow: UP 1.1 percent at 34,052.15 points
London – FTSE 100: UP 0.4 percent at 7,630.63 (close)
Frankfurt – DAX: UP 0.3 percent at 15,237.99 (close)
Paris – CAC 40: UP 0.3 percent at 7,022.19 (close)
EURO STOXX 50: UP 0.3 percent at 4,149.86 (close)
Tokyo – Nikkei 225: DOWN 2.0 percent at 31,659.03 (close)
Hong Kong – Hang Seng Index: DOWN 1.0 percent at 17,640.36 (close)
Shanghai – Composite: DOWN 0.5 percent at 3,073.81 (close)
Brent North Sea crude: DOWN 0.6 percent at $90.31 per barrel
West Texas Intermediate: DOWN 0.3 at $87.40 per barrel
Euro/dollar: UP at $1.0548 from $1.0513 on Friday
Pound/dollar: UP at $1.2195 from $1.2138
Dollar/yen: UP at 149.56 yen from 149.53 yen
Euro/pound: DOWN at 86.48 pence from 86.58 pence