(Bloomberg) — There was a sense of relief in markets after Israeli retaliatory strikes against Iran averted oil facilities, with crude oil falling and stocks rising at the start of what appears to be a pivotal week for investors.
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Iran said its oil industry was operating normally after Israeli attacks on military targets across the country. This has eased some geopolitical tensions as markets prepare for a week filled with corporate earnings and key economic data, with the US presidential election also approaching.
“Israel’s measured and targeted response has raised hopes for de-escalation,” Warren Patterson, head of commodities strategy at ING in Singapore, wrote in a note. “If we see some cooling that will once again allow fundamentals to dictate price direction.”
Oil fell more than 5% at one point, while gold also fell. The Israeli shekel achieved the highest strength among about 150 currencies tracked by Bloomberg.
Stock index futures pointed to a rebound on Wall Street after the S&P 500 index posted its first weekly decline in seven weeks. Airlines, whose fuel costs are linked to oil prices, were among the biggest gainers in pre-market trading, while energy stocks fell. Boeing retreated after Bloomberg reported that the beleaguered plane maker was planning a capital raise.
The 10-year Treasury yield rose about four basis points to 4.28%, while the dollar measure remained steady.
The Stoxx Europe 600 index rose. Luxury stocks including LVMH and Hermes International SCA were among the top gainers by index score, while energy majors Shell Plc, TotalEnergies SE and BP Plc weighed on the gauge.
“We continue to see strong investor appetite for equities – they appear to be excited about the global interest rate easing cycle while corporate earnings remain positive,” said Maria Veitman, chief multi-asset strategist at State Street Global Markets. “Lower oil prices as conflict in the Middle East does not escalate is also helpful.”
Among individual stock moves in Europe, shares of Sonova Holding AG rose more than 5% after Zurcher Kantonalbank said Costco Wholesale Corp will resume selling the company’s Sennheiser hearing aids. Royal Philips NV shares fell 17% after the Dutch medical technology company cut its sales forecasts. Shares of Porsche AG fell after the German automaker reported earnings that fell short of analysts’ expectations.
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