Oil fall, stocks rise as IranIsrael war fears ease

AFP | London

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Stocks rose and oil prices retreated yesterday as fears of a wider Middle East conflict eased even as Israel and Iran pounded each other with missiles for a fourth day.

The dollar and safe-haven gold declined slightly.

"As things stand, investors seem less fearful than they were going into the weekend of the possibility that the war between Israel and Iran spreads across the Middle East, and beyond," said David Morrison, senior market analyst at financial services provider Trade Nation.

"It appears that most of the Israeli airstrikes and missile launches avoided the most significant parts of Iran’s energy infrastructure. And so far Iran's retaliation has done relatively little damage," he added.

Wall Street opened in the green, with the tech-heavy Nasdaq up around one% in early deals, while London, Paris and Frankfurt were all higher in afternoon trading.

That tracked gains in Asia, where Tokyo closed up 1.3%, boosted by a weaker yen, while Hong Kong and Shanghai also advanced.

Israel's surprise strike against Iranian military and nuclear sites on Friday -- killing top commanders and scientists -- sent crude prices soaring as much as 13% at one point on fears about supplies from the region.

However, concerns over the conflict spreading appeared to have eased, with both main oil contracts retreating by more than 1% on Monday.

Analysts said the recent decision by the OPEC+ group of crude producing nations, led by Saudi Arabia and Russia, to raise output again in July also played a role.

"Financial markets are very good at absorbing geopolitical risk, and OPEC+'s supply boost is also helping to cushion the blow," said Kathleen Brooks, research director at trading group XTB.

"There may need to be a major escalation in the conflict before we get another sharp upswing in oil and gold prices," she added.

Analysts had warned that the spike could send inflation surging globally again, dealing a blow to long-running efforts by governments and central banks to get it under control.

Investors were gearing up for monetary policy decisions this week from the US Federal Reserve, Bank of England and Bank of Japan.

All are expected to stand pat but traders will be keeping a close watch on their statements for clues on interest-rate outlooks, with US officials under pressure from President Donald Trump to cut borrowing costs.