Investors moved away from safe-haven assets on Monday, causing a rise in global equities and a decline in prices for gold, oil, and bonds. This shift followed indications that a broader conflict in the Middle East may not escalate, reducing the need for safer investments.
- Stock Markets: MSCI’s global stock index increased by 0.35% to 745.90, indicating a more risk-on sentiment among investors. On Wall Street, the major indices experienced slight gains: the Dow Jones Industrial Average rose 0.13% to 38,037.07, the S&P 500 climbed 0.19% to 4,976.62, and the Nasdaq Composite gained 0.09% to 15,296.43. In Europe, the STOXX 600 rose 0.68%, while MSCI’s Asia Pacific index outside Japan climbed 0.95%.
- Gold and Oil: Spot gold saw a significant drop of 2.1% to $2,340.25 an ounce, potentially the largest one-day decline in over a year. Oil prices also decreased, with Brent crude futures falling 0.57% to $86.79 per barrel and U.S. crude down 0.26% to $82.92.
- Bonds and Currency Markets: U.S. bond yields rose, with the 10-year Treasury note yield climbing to 4.625% and the 30-year bond yield rising to 4.7303%. In Europe, the Bund yield hit a 5-month high. The dollar index rose slightly by 0.1% to 106.21, indicating a modest strengthening of the U.S. dollar.
Middle East Conflict Easing:
Investor concerns about a broader Middle East conflict eased following signs that Israel and Iran were not seeking further escalation. This contributed to the move away from safe-haven assets like gold and bonds. Despite these developments, investors remain cautious due to other factors, such as the ongoing expectations of Federal Reserve interest rate cuts and potential concerns in the tech and chip sectors.
Corporate Earnings Outlook:
Investors are closely monitoring corporate earnings reports, with over 150 companies in the S&P 500 and 173 companies in the STOXX 600 scheduled to release their first-quarter results this week. This includes tech giants like Microsoft and Alphabet, drawing attention due to Nvidia’s significant drop on Friday.
Commodities and Commodities-Heavy Markets:
Commodities-heavy markets like London’s FTSE-100 benefited from gains in tin and nickel, nearing an all-time high with a 1.72% increase. Portuguese stock indices surged by 3.11%, bolstered by a significant rise in Galp Energia after announcing a large oil field off the coast of Namibia.
Overall, the easing of geopolitical tensions and a focus on corporate earnings contribute to the shifting market dynamics, as investors look to balance risk and opportunities amid ongoing uncertainties.
