U.S. President Trump's Iran stance lifts markets as oil falls
World equities rose after President Trump indicated a pause on new Iran strikes, while oil prices slipped and Canadian markets awaited earnings and economic data.
World equity markets gained momentum on Tuesday as a decline in oil prices boosted sentiment following President Donald Trump’s statement that he would hold off on additional military action against Iran. The easing of geopolitical risk helped lift the STOXX 600 by 0.83%, the FTSE 100 by 0.43%, Germany’s DAX by 1.24% and France’s CAC 40 by 1.09%. In Asia, Japan’s Nikkei rose 2.87% and Hong Kong’s Hang Seng added 0.44%.
In North America, Nvidia’s shares recovered 2% in pre-market trading after a 4.3% drop, as the company’s board examined whether CEO Jensen Huang was the target of a foreign intelligence operation. Wall Street futures were mixed, with the Nasdaq pointing lower ahead of U.S. inflation data that could influence short-term interest-rate expectations. TSX futures were largely unchanged after yesterday’s gains in major North American markets.
Canadian investors awaited results from several companies, including Hydro One Ltd., Finning International Inc., Altius Minerals Corp., CCL Industries Inc., Discovery Mining Ltd., Freehold Royalties Ltd., Keyera Corp., Pet Valu Holdings Ltd. and Superior Plus Corp. On Wall Street, attention turned to earnings from CoreWeave Inc.
“The situation for Trump has changed politically with the midterms… that probably makes it more likely that he wants to come to an accord with Iran before he’s held back by Congress,” said Joost van Leenders, senior investment strategist at Van Lanschot Kempen Investment Management in Amsterdam.
Oil prices continued to fall, extending losses from the previous session. Brent crude futures dropped 1.9% to US$90.82 a barrel and West Texas Intermediate slipped 1.5% to US$85.53 a barrel after President Trump downplayed the need for further military action, reducing concerns about supply disruptions in the Middle East.
“The market continues to prioritize President Trump’s more conciliatory tone toward Iran since the midterms,” said Tim Waterer, chief market analyst at KCM Trade. “While attacks on shipping around the Strait of Hormuz are still occurring, they have not escalated in a way that has forced a fresh risk premium into the market.”
Precious metals fell, with spot gold down 1.6% to US$4,071.07 an ounce and December U.S. gold futures easing 0.9% to US$4,079.80. The Canadian dollar weakened, trading at $1.4128 per U.S. dollar after moving within a range of 70.71 to 70.90 U.S. cents. The U.S. dollar index rose 0.05% to 101.70, while the euro slipped 0.01% to US$1.1225 and the British pound fell 0.1% to US$1.3429. The yield on the U.S. 10-year Treasury note was last reported at 4.894%.
Upcoming economic releases include China’s trade deficit, Japan’s household spending and bank lending data, the NFIB Small Business Economic Trends Survey, ADP employment figures, the U.S. CPI for October (expected to rise 0.3% from September), and the Bank of Canada’s summary of deliberations ahead of its October 28 decision.