Oil prices tumbled and global stocks mostly rose Monday on relief that Israel’s strikes on Iran avoided the country’s energy infrastructure.
Israel spared oil and nuclear facilities in its air strikes on Iranian military targets Saturday, easing investor concerns about the extent of Israel’s retaliation to Tehran’s October 1 missile barrage.
“Investors breathed a sigh of relief as the attack was more restrained than expected,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Oil prices have swung wildly in recent weeks, with investors concerned that an attack on Iran’s oil facilities would not only take Iranian crude off the market but spur a wider conflict involving other regional oil producers.
Brent North Sea crude, the international benchmark oil contract, fell around six percent on Monday with prices hovering around $71 per barrel.
“Israel’s strike, carefully avoiding energy sites, has softened fears of a full-scale conflict with Iran,” said Stephen Innes, analyst at SPI Asset Management.
“Even more telling is Iran’s response, downplaying the attack’s impact and signaling that its warnings may have deterred any more aggressive action from Israel,” he added.
Concerns in the oil market have now shifted back to focus on potential oversupply in 2025 and a slowdown in demand from China, the world’s largest oil importer, according to analysts.
US stocks opened higher, boosted by the cheaper oil, and as investors look ahead to a busy week of economic indicators that could set the direction for a market that is already hovering near record highs.
On Wednesday comes the first estimate of third-quarter US GDP, and on Thursday the Federal Reserve’s preferred inflation gauge will be reported. Finally, Friday sees the release of key US monthly jobs figures.
Together, the reports should provide clues on the Fed’s interest rate policy for the rest of the year.
“The market has got used to a strong US economy, and better than expected economic data, thus, we could see a volatile reaction to the US payrolls data later this week” if they are less rosy than previous months, said Kathleen Brooks, research director at XTB.
It’s also a big week for US company earnings as five of the “Magnificent Seven” tech stocks will report third-quarter results, including Alphabet (Google), Amazon, Apple, Meta (Facebook) and Microsoft.
“The market expects the US tech giants to continue to report double digit earnings growth for the next five quarters, so there are some big expectations for these companies,” said Brooks, research director at trading group XTB.
In Europe, Paris was higher but London was little changed as crude prices affected both ends of the top-tier FTSE 100 index.
Oil and gas giants BP and Shell were both hit by the lower crude prices, making them the biggest fallers.
Meanwhile airlines easyJet and British Airways-owner IAG led gains on the prospect of lower fuel prices.
Dutch medical device maker Philips lowered its full year sales target Monday blaming a deterioration in demand from China, with its share price dropping more than 17 percent on the Amsterdam stock exchange’s blue-chip AEX index.
On currency markets the yen hit a three-month low, sliding more than one percent against the dollar as Sunday’s general election resulted in a hung parliament.
But that helped the Tokyo stock market close up 1.8 percent as the yen’s weakness boosted shares of exporters.
– Key figures around 1340 GMT –
Brent North Sea Crude: DOWN 6.0 percent at $71.48 per barrel
West Texas Intermediate: DOWN 6.4 percent at $67.22 per barrel
New York – Dow: UP 0.7 percent at 42,410.35 points
New York – S&P 500: UP 0.5 percent at 5,835.67
New York – Nasdaq Composite: UP 0.6 percent at 18,623.40
London – FTSE 100: UP 0.1 percent at 8,255.76
Paris – CAC 40: UP 0.5 percent at 7,536.54
Frankfurt – DAX: UP less than 0.1 at 19,467.86
Tokyo – Nikkei 225: UP 1.8 percent at 38,605.53 (close)
Hong Kong – Hang Seng Index: FLAT at 20,599.36 (close)
Shanghai – Composite: UP 0.7 percent at 3,322.20 (close)
Euro/dollar: UP at $1.0819 from $1.0799 on Friday
Pound/dollar: UP at $1.2988 from $1.2958
Dollar/yen: UP at 152.70 yen from 152.27 yen
Euro/pound: UP at 83.32 pence from 83.30 pence
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