European shares ended higher yesterday after Iran indicated the overnight missile strikes “concluded” its retaliation to the US killing of General Qassem Soleimani.
Tehran’s attack on US military bases in Iraq initially raised fears of a wider war in the Middle East, spurring a flight to safer assets and causing the pan-European STOXX 600 to fall as much as 0.6%.
However, the benchmark index gradually recovered and closed 0.2% higher as Iran said it did not seek to escalate the confrontation.
There were no American casualties in the attack and Tehran appeared to be standing down, US President Donald Trump said in the final minutes of European trading hours, lifting US stock indexes to record highs.
“After a very negative initial reaction to the overnight events in the Middle East, the market seems to be picking up hope that the events provide the sufficient base for de-escalation,” said Ingo Schachel, head of equity research at Commerzbank.
London’s FTSE 100 was flat at to close 7,574.93 points; Paris’ CAC 40 was up 0.3% at 6,031.00, while Frankfurt’s DAX 30 rose 0.7% at 13,320.18.
Germany’s DAX outperformed regional bourses as the positive geopolitical development overshadowed an earlier data showing an unexpected fall in industrial orders in November in the country.
France’s Airbus, among the biggest boosts to the pan-regional index, rose 2% as its US rival Boeing Co’s 737-800 jet belonging to a Ukrainian airline burst into flames shortly after take-off from Tehran, killing all 176 people aboard.
Airbus shares helped the travel and leisure to lead the charge among European subsectors with its 0.7% gain.
On the other hand, Boeing suppliers Senior Plc, Safran and Melrose slipped between 0.1% and 1.2%.
In Britain, the blue-chip index lagged its European peers, weighed down by losses in shares of energy giants BP and Royal Dutch Shell which tracked oil prices lower.
London’s FTSE 250 midcaps index was pulled down 0.8% by declines in real estate companies.
Global oil prices plunged yesterday, totally reversing a earlier needle-thin spike that followed Iranian missile attacks on US targets in Iraq.
Comments by Iranian officials and Trump eased tension substantially and pushed crude prices lower and lower in late European trading.
The strikes sent Brent and WTI prices to multi-month peaks before profit-taking prevailed.
Trump told a press conference, “Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world.”
Iranian Foreign Minister Mohammad Javad Zarif had tweeted earlier that the country does “not seek escalation or war”.
Analysts pointed out that oil traders had many sources at their disposal in any event.
“Sooner or later investors will realise that the plentiful non-Opec supply will more than make up for any short-term disruptions in the Middle East,” noted Forex.com market analyst Fawad Razaqzada.
SEB analyst Bjarne Schieldrop added that “not a single drop of oil supply has been lost due to the recent incidents and this is why the oil price has fallen back down again so quickly.”
from Gulf Times https://ift.tt/2QZ3qU5
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