AFTER steep losses in Asian markets, US and European shares were rising yesterday as oil prices took a step back after a dramatic two-day rally and a jump in cryptocurrency encouraged investors even while they cautiously monitored the Middle East war.
The dollar fell and US Treasury yields were rising for a third straight day, even as the US and Israel pressed on with round-the-clock assaults on Iran.
“The market is cautiously optimistic around the Iran, US, Israel conflict, in the sense of, hopefully, it will be a short endeavour,” said Ben Sullivan, chief investment officer at AE Wealth Management.
On Wall Street traders were encouraged by a dip in oil prices and a strong rally in bitcoin along with gains in the semiconductor sector and recently battered software stocks, according to Michael James, equity sales trader, Rosenblatt Securities.
“You combine all of those and it equates to a market that’s feeling further emboldened,” said James, adding that bitcoin’s gains encouraged long-term and short-term traders to take on risk.
“The fact the stock market has rallied impressively off two gap down lows Monday and Tuesday morning, and recovered meaningfully, gave some added conviction to the bulls,” he said.
In cryptocurrencies, bitcoin gained 7.77 per cent to $73,338.07. Ethereum rose 9.15pc to $2,149.09. On Wall Street yesterday afternoon, the Dow Jones Industrial Average rose 329.68 points, or 0.68pc, to 48,832.84, the S&P 500 rose 60.03 points, or 0.88pc, to 6,876.69 and the Nasdaq Composite rose 330.30 points, or 1.47pc, to 22,846.99. MSCI’s gauge of stocks across the globe rose 2.76 points, or 0.27pc, to 1,032.54 while the pan-European STOXX 600 index rose 1.37pc.
However, in Asia equity investors were a lot more bearish. In South Korea, the KOSPI benchmark closed down 12pc, the index’s largest drop on record. South Korea is heavily reliant on Middle Eastern oil. While the KOSPI was still showing a more than 20pc year-to-date gain, over two days the tech-heavy index has lost more than 18pc of its value while the currency slumped to a 17-year low.
Japan’s Nikkei fell 3.6pc and Taiwan stocks dropped 4.3pc. In currencies, the US dollar slipped, pulling back from the multi-month highs it touched in the previous session, as investors unwound safe-haven positions on rising hopes that the Middle East conflict may prove shorter-lived than initially feared.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.29pc to 98.79, with the euro up 0.21pc at $1.1638.
Against the Japanese yen, the dollar weakened 0.51pc to 156.89 while sterling strengthened 0.09pc to $1.3368. In government bonds, US Treasury yields advanced as investors gauged the likelihood of higher inflation and the path of monetary policy as the war in Iran continues to put oil prices at risk of rising further.
The yield on benchmark US 10-year notes rose 1.2 basis points to 4.069pc, from 4.057pc late on Tuesday while the 30-year bond yield rose 0.8 basis points to 4.7107pc.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 1.6 basis points to 3.517pc. For now, oil prices paused their rally after the report about Iranian operatives seeking US talks to end the Middle East conflict. Still, US and Israeli strikes against Iran escalated the conflict and paralysed shipping through the Strait of Hormuz, disrupting oil shipping for a fifth day.
US crude fell 0.63pc to $74.09 a barrel and Brent fell to $81.06 per barrel, down 0.38pc on the day. Trading in precious metals was boosted by the pause in the dollar’s rally and appeared to suggest that investors were still counting on safe-have assets because of the uncertainty brought by the war.
Spot gold rose 1.21pc to $5,148.17 an ounce. US gold futures rose 0.7pc to $5,143.00 an ounce. Spot silver rose 2.08pc to $83.73 an ounce.
Meanwhile, Bahrain All Share Index closed at 2,005.39 points yesterday, marking a decrease of 26.36 points below the previous closing.
This decrease was due to the drop in the communications services sector, the consumer discretionary sector, the financial sector, and the material sector.
Bahrain Islamic Index has closed at 970.39 points, marking a decrease of 28.99 points below the previous closing.
Results indicated that 126 equity transactions took place with a volume of 1,262,497 worth BD351,879.
Investors traded mainly in the Financial Sector, representing 65.47pc of the total value of securities traded.
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