Stocks rally as investors regain some nerve; Israel conflict rages on
Last updated on: 10 October,2023 02:24 pm
The MSCI All-World index rose for a fifth day
LONDON (Reuters) - Global stocks snapped higher on Tuesday, in line with a retreat in bond yields after Federal Reserve officials signaled the recent yield surge could justify caution on interest rates, while oil eased, but violence in the Middle East made for nervy trading.
The MSCI All-World index rose for a fifth day, up 0.5 per cent, after having hit five-month lows last week, thanks in part to a 1.4pc rise in Europe's STOXX 600.
E-mini futures for the S&P 500 index were up between 0.1-0.2pc, while Treasuries staged a powerful rally, catching up with the decline in yields across global bond markets on Monday, when the US market was closed for a holiday.
The rush into perceived safe-haven assets such as the dollar, gold and government bonds at the start of the week eased somewhat, while oil prices, which surged by over 4pc at one point on Monday, retreated.
But investors were closely watching military clashes between Israel and the Palestinian Islamist group Hamas, after the latter unleashed a surprise assault at the weekend in which hundreds were killed and many abducted.
The Israeli military has since said it called up an unprecedented 300,000 reservists and was imposing a total blockade on the Gaza Strip, raising expectations of a possible ground assault.
"Geopolitical tensions are a huge problem for markets, just because the range of outcomes is very wide and, therefore, unless there is a clear direction of travel and development, it's very hard to decide which way prices should go," Berenberg economist Kallum Pickering said.
"Markets are telling us at the moment we don't need to be worried about an oil shortage, which is fair, and that there is - I would say - a modest increase in demand for safe-havens."
Israeli markets and the shares of companies exposed to Israel have been hit hard. The shekel , which hit a near-eight year low against the dollar the day before, was down 0.3pc on the day, while the cost of insuring against the risk of sovereign default surged to its highest since 2016.