World stocks lifted by Wall Street surge as Iran fears boost oil

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

Paris (AFP) – Stock markets across Asia and the eurozone rose on Monday following a blistering lead from Wall Street as a soft jobs report soothed concerns about rising US interest rates.

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

All three main indexes in New York clocked up sizeable gains Friday after the non-farm payrolls report showed weak wage growth, soothing anxieties that the Federal Reserve could lift borrowing costs as many as four times this year to keep inflation in check.

Hong Kong was 0.2 percent higher and Shanghai surged 1.5 percent, while Sydney was 0.4 percent up. Wellington, Taipei, Jakarta and Manila were well up.

But Tokyo ended marginally lower as traders returned following an extended holiday weekend, while Singapore was 0.2 percent off.

Seoul was closed for a public holiday.

Europe’s main market London was also shut for a holiday, but Frankfurt and Paris posted modest gains.

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

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

“Certainly, the earnings have been there but it seems the narrative was molded by the comments of the Caterpillar (chief financial officer) who said the first quarter was likely the high-water mark.

“That he said that is not remarkable. That it resonated with the market is the important point.”

– Energy firms rally –

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.

“Whatever optimism investors had about China-US trade negotiations should be undermined by the fact there was no communique, with rumours suggesting the two superpowers are sitting worlds apart after the US failed to win any concessions,” said Stephen Innes, head of Asia-Pacific trade at OANDA.

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”.

The rise in oil boosted energy firms in Asia with CNOOC, PetroChina and Sinopec surging in Hong Kong, while Sydney-listed Woodside Petroleum and Tokyo-listed Inpex were also sharply higher.

– Air France nosedives –

In Paris, shares in Air France-KLM went into free fall, losing 12 percent, after the strike-hit company’s CEO resigned and the government seemed to worry 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 were up nearly one 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.

 – Key figures around 0945 GMT – 

London – FTSE 100: Closed for a public holiday

Frankfurt – DAX 30: UP 0.4 percent at 12.864,11

Paris – CAC 40: UP 0.1 percent at 5,519.32

EURO STOXX 50: FLAT at 3,550.73

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)

New York – Dow: UP 1.4 percent at 24,262.51 (close)

Euro/dollar: DOWN at $1.1928 from $1.1957 at 2100 GMT on Friday

Pound/dollar: DOWN at $1.3531 from $1.3534

Dollar/yen: UP at 109.28 yen from 109.08

Oil – West Texas Intermediate: UP 67 cents at $70.39 per barrel

Oil – Brent North Sea: UP 63 cents at $75.50 per barrel

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