London (AFP) – European stock markets rose Monday but oil and gold prices tumbled as concerns eased over US monetary policy and the chances of an American attack on Iran. “Many investors bought gold and silver as protection against the volatile geopolitical backdrop, yet they’ve learned the hard way these assets can also be volatile themselves,” said Russ Mould, investment director at AJ Bell. The London, Paris, and Frankfurt equity indices edged higher despite heavy losses by heavyweight miners. Major Asian stock markets closed lower as tech companies fell sharply.
Gold and silver began tumbling Friday as the dollar rebounded on news that US President Donald Trump had chosen Kevin Warsh to become the new head of the US Federal Reserve. Sharp losses continued Monday, with gold shedding 4.3 percent to $4,682 an ounce and silver sliding almost five percent to $81 an ounce. That left both precious metals far below respective record highs of above $5,500 and $120 reached last week. Trump has said that Warsh, a former Morgan Stanley investment banker and Fed governor, “will go down as one of the great Fed Chairmen, maybe the best”. Traders regard Warsh as the toughest inflation fighter among the final candidates, raising expectations that his monetary policy would underpin the greenback. The choice also eased concerns about the Fed’s independence following a series of attacks on incumbent Jerome Powell over his reticence to cut rates as quickly as the president wanted.
Oil prices meanwhile plunged on easing US-Iran tensions. Both main crude contracts shed more than five percent at one point after Trump said he was hopeful of reaching a deal with Tehran. Washington has hit out at the country’s leadership in recent weeks over its deadly response to anti-government protests, with Trump threatening military action. He has also pushed for an agreement over Iran’s nuclear programme.
Monday’s volatility across markets comes as investors look ahead to more big earnings due this week alongside interest-rate decisions and US jobs data. After a strong January fuelled by artificial intelligence bets, stocks went into reverse last week as traders resumed questioning the wisdom of the vast sums pumped into the sector and when they will see returns. That has also raised fears of a tech bubble that could soon pop. The latest round of selling came after Microsoft last week announced a surge in spending on AI infrastructure, reviving concerns companies could take some time before seeing a return on their investments.
Seoul, which has hit multiple records this year thanks to its big tech weighting, plunged more than five percent on Monday, with chip giant SK Hynix shedding eight percent and market heavyweight Samsung off more than six percent. Tokyo, also home to several big-name tech firms, shed more than one percent, as did Taipei, where chip giant TSMC is listed.
– Key figures at around 1115 GMT –
London – FTSE 100: UP 0.3 percent at 10,252.04 points
Paris – CAC 40: UP 0.4 percent at 8,157.81
Frankfurt – DAX: UP 0.5 percent at 24,666.43
Tokyo – Nikkei 225: DOWN 1.3 percent at 52,655.18 (close)
Hong Kong – Hang Seng Index: DOWN 2.2 percent at 26,775.57 (close)
Shanghai – Composite: DOWN 2.5 percent at 4,015.75 (close)
New York – Dow: DOWN 0.4 percent at 48,892.47 (close)
Euro/dollar: UP at $1.1866 from $1.1856 on Friday
Pound/dollar: UP at $1.3701 from $1.3688
Dollar/yen: UP at 154.79 yen from 154.64 yen
Euro/pound: DOWN at 86.61 pence from 86.63 pence
Brent North Sea Crude: DOWN 4.8 percent at $66.00 per barrel
West Texas Intermediate: DOWN 5.1 percent at $61.8 per barrel
© 2024 AFP
