World stocks gain on lingering Fed optimism

Donald Trump has said he will decide by May 12 on whether or not to dump the Iran nuclear deal
AFP

Paris (AFP) – Global stock markets rose on Monday as investors enjoyed a more relaxed mood about US interest rates which may not rise as abruptly as had been feared.

Wall Street added to its blistering Friday gains seen after a soft jobs report soothed anxieties that the Federal Reserve could lift borrowing costs as many as four times this year to keep inflation in check.

“US stocks are extending Friday’s rally in early action, with last week’s labor report keeping Fed concerns in check,” brokers Charles Schwab said.

Oil prices, meanwhile, extended a rally ahead of Donald Trump’s decision on the future of the Iran nuclear deal.

Europe’s biggest stock market, London, was shut for a bank holiday Monday, sapping volumes elsewhere on the continent.

Frankfurt and Paris both posted gains.

Earlier, most Asian markets had closed higher — with Shanghai a  standout — while Tokyo ended marginally lower as traders returned following an extended holiday weekend.

There are now worries that markets may have plateaued, with strong earnings unable to help push gains further, some analysts are suggesting.

“The big surprise from this stellar earnings season is that the market hasn’t broken higher,” said Greg McKenna, chief market strategist at AxiTrader.

– Iran deal –

Investors remain on edge on concerns about the China-US trade spat after high-level talks in Beijing last week ended with no agreement between the two sides.

Traders are also nervously awaiting Trump’s decision on whether to continue with the Iran nuclear deal which he has in the past derided.

The president has said he will decide by May 12, with many fearing he will pull out of the 2015 deal and spark fresh turmoil in the Middle East.

Speculation he will dump the agreement has fired oil prices to four-year highs, with both main contracts above $70 and forecast to go even higher.

“Market participants are holding US President Trump’s upcoming decision on the Iran sanctions and the production outages in Venezuela responsible,” analysts at Commerzbank said, adding however that “neither is really anything new”.

Iranian President Hassan Rouhani warned that if Trump quits the deal then Washington will regret it “like never before”.

Market analyst Jasper Lawler at London Capital Group said it appears the deal is dead but that a renegotiation might still be possible.

“Any talk of an Iran nuclear deal 2.0 could put a top in the oil price,” he said.

– Air France nosedives –

In Paris, shares in Air France-KLM went into free fall, losing 9.8 percent, after the strike-hit company’s CEO resigned and the government seemed concerned about the carrier’s chances of survival.

Air France-KLM boss Jean-Marc Janaillac announced his resignation Friday after staff at the carrier’s French operations rejected a pay deal aimed at ending months of walkouts.

Switching to a “sell” recommendation from a previous “buy”, Societe Generale said the staff vote “not only puts the cost efficiency targets at risk in our view, but even the integrity of the group”.

Nestle shares climbed 1.6 percent in Zurich after the Swiss food giant said it will pay $7.15 billion in cash for the rights to market Starbucks products around the world, outside of the company’s coffee shops.

The agreement gives Nestle, which owns the Nescafe and Nespresso brands, a strong platform for continued growth in North America, it said.

Starbucks said it would use the proceeds to accelerate share buybacks.

– Key figures around 1530 GMT – 

New York – Dow: UP 0.8 percent at 24,455.96 points

London – FTSE 100: Closed for a public holiday

Frankfurt – DAX 30: UP 1.0 percent at 12.948.14 (close)

Paris – CAC 40: UP 0.3 percent at 5,531.42 (close)

EURO STOXX 50: UP 0.4 percent at 3,565.97

Tokyo – Nikkei 225: FLAT at 22,467.16 (close)

Hong Kong – Hang Seng: UP 0.2 percent at 29,994.26 (close)

Shanghai – Composite: UP 1.5 percent at 3,136.64 (close)

Euro/dollar: DOWN at $1.1925 from $1.1957 at 2100 GMT on Friday

Pound/dollar: UP at $1.3570 from $1.3534

Dollar/yen: UP at 109.21 yen from 109.08

Oil – West Texas Intermediate: UP 77 cents at $70.49 per barrel

Oil – Brent North Sea: UP $1.17 at $76.04 per barrel

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