European Markets Rise as Tensions Ease
European stocks rose on Monday, as investors bet that the Israel-Iran conflict will not have a broad impact on economies outside the Middle East. Kering SA gained on news that the luxury goods company will name Renault SA’s chief executive as its next CEO.
The Stoxx Europe 600 Index was up 0.2% at 8:10 a.m. in London, after falling on Friday. Energy and banking sectors led gains, while health care fell. Luxury stocks got a boost from Chinese data showing accelerated growth in retail sales last month, while Kering rose as much as 6.3% — the best-performing stock in the benchmark — after Bloomberg News reported Luca de Meo will be named the next CEO to turn around struggling fashion label Gucci.
Renault shares fell as much as 8%. The consensus in equity markets was that positions were already light even before Israel’s attack on Iran, which limited the decline. Investors were more focused on commodities, with oil prices rising on concerns that continued attacks could disrupt oil supplies, putting upward pressure on inflation just as many central banks are worried about growth.
"Geopolitical tensions, while often deadly, usually have a short-term impact on financial markets and tend to be met with a flight to safety response and higher commodity/oil prices," said Charles-Henry Monchau, CIO at Banque SYZ in Geneva.
President Trump said he believes the two sides can reach a deal to end the conflict, but they may need to continue fighting before they are ready to broker a peace deal.
Source: Bloomberg
