LONDON, United Kingdom, Sept 18 – Europe’s main stocks markets rose on Monday after healthy gains in Asia, buoyed by cooling geopolitical tensions before this week’s US interest rate call.
In late morning deals, London, Frankfurt and Paris rose on burgeoning investor optimism after yet another record finish on Wall Street ahead of the weekend.
Fading North Korea tensions have persuaded many investors to remove their cash from haven investments like gold, and plough it back into riskier equities.
Fears over North Korea receded soon after Friday’s second missile test in a month. While the launch over Japan revived geopolitical worries especially soon after its provocative nuclear test analysts said investors were calm for now.
“European stocks market are in positive territory today as geopolitical tensions cool,” said David Madden, market analyst at trading company CMC Markets UK.
“Traders are in risk-on mode this morning as global political and environmental factors return to normal.
“The standoff in relation to North Korea is still ongoing, but seeing as there has been no fresh negative developments, dealers are happy to buy into stocks,” he added.
Investor focus is now turning towards this week’s US Federal Reserve monetary policy meeting ending Wednesday.
Markets will be closely watching the US central bank as its policymakers deal with the fallout from hurricanes Harvey and Irma, which hammered the country and are expected to hit economic growth.
While the Fed is tipped to keep borrowing costs on hold, the bank’s plans for cutting back crisis-era bond-buying stimulus and any signals about the future of interest rates will be pored over.
However, analysts were unsure about any further increases this year with inflation remaining subdued apart from a bigger-than-expected jump in August and other indicators still soft.
Despite the trend towards tightening, stock markets remain buoyant and on Friday the Dow and S&P 500 both closed at all-time highs.
Pound kicks on
The pound meanwhile continues to shine against the dollar after the Bank of England last week indicated it would likely tighten monetary policy itself very soon.
BoE governor Mark Carney said Thursday the chances of a rise had increased. This was followed Friday by another policymaker signalling a move in the coming months.
Central banks are shifting from their easy-money policies as the world economy slowly improves, and the European Central Bank is also set to wind in its own stimulus.
The pound declined Monday, ducking underneath $1.36, but remains close to its highest dollar level since Britain voted to leave the European Union in June 2016.
Key figures around 1045 GMT
London – FTSE 100: UP 0.3 percent at 7,236.90 points
Frankfurt – DAX 30: UP 0.3 percent at 12,555
Paris – CAC 40: UP 0.3 percent at 5,229.70
EURO STOXX 50: UP 0.3 percent at 3,527.60
Hong Kong – Hang Seng: UP 1.3 percent at 28,159.77 (close)
Shanghai – Composite: UP 0.3 percent at 3,362.86 (close)
Tokyo – Nikkei 225: Closed for public holiday
New York – DOW: UP 0.3 percent at 22,268.34 (close)
Euro/dollar: DOWN at $1.1939 from $1.1947 at 2100 GMT
Dollar/yen: UP at 111.38 yen from 110.86 yen
Pound/dollar: DOWN at $1.3561 from $1.3593
Oil – Brent North Sea: UP two cents at $55.64 per barrel
Oil – West Texas Intermediate: DOWN one cents at $49.88