World stocks rose along with US Treasury yields and the US dollar yesterday as investors regained an appetite for riskier investments amid an easing of tensions in a nuclear standoff between the United States and North Korea.
After a week of jitters that sent stock markets worldwide tumbling, investor fears eased after South Korea’s president said resolving North Korea’s nuclear ambitions must be done peacefully and US officials played down the risk of an imminent war.
MSCI’s world equity index was up 0.86 per cent after its biggest weekly drop since early November. The US benchmark S&P 500 climbed and the pan-European STOXX 600 rose 1.26 per cent following a 0.89 per cent jump in MSCI’s index of Asia-Pacific shares outside Japan.
The Dow Jones Industrial Average rose 149.22 points, or 0.68 per cent, to 22,007.54, the S&P 500 gained 24.42 points, or 1.00 per cent, to 2,465.74 and the Nasdaq Composite added 74.74 points, or 1.19 per cent, to 6,331.30. The CBOE volatility gauge, better known as the VIX, tumbled from Friday’s nine-month high of 15.51 and was at 12.45, near its session low.
In currencies, the US dollar was up almost one per cent against the Swiss franc, erasing much of the greenback’s losses last week against the Swiss currency, which is viewed as a safe bet during times of geopolitical turmoil.
The dollar was up 0.4 per cent against the Japanese yen, reversing some of its 1.37 per cent loss last week against the safe-haven currency. Against a basket of major currencies, the US dollar rose 0.3 per cent.
Last week’s equity market losses – and yen gains – were sparked by a war of words between Pyongyang and Washington after US President Donald Trump warned North Korea it would face “fire and fury” if it threatened the United States.
That prompted North Korea to say it was considering plans to fire missiles at the US island territory of Guam.
While North Korea’s Liberation Day celebration today to mark the end of Japanese rule could see tensions rise again, markets were relieved that the weekend passed without further escalation.
US Treasury benchmark yields rebounded from six-week lows as the easing of tensions with North Korea led investors to pare back their holdings of low-risk government debt.
Oil price futures recovered losses from earlier in the session as disruptions in Libya were expected to reduce the Opec producer’s exports.
US crude rose 0.49 per cent to $49.06 per barrel after falling as low as $48.37 and Brent was last at $52.27, up 0.33 per cent after hitting a low of $51.60.
Gold was out of favour yesterday after clocking a 2.46 per cent jump last week. Spot gold dropped 0.4 percent to $1,283.51 an ounce.