NEW YORK (Reuters) - Crude oil prices slid and equity markets around the world set new highs on Thursday as investors took on greater risk in a relief rally after the United States and Iran moved to defuse escalating tensions in the Middle East.
Gold prices retreated further from a near seven-year peak scaled after Iran’s missile strike on military bases housing U.S. troops in Iraq early on Wednesday. The attack came in response to last week’s U.S. drone strike that killed a top Iranian general and raised fears of a greater regional conflict.
The safe-haven yen fell to more than a one-week low against the dollar while yields on U.S. government debt initially fell, pushed lower by a strong weekly jobless report.
Equities rallied on the de-escalation of U.S.-Iranian tensions and also got a boost from China’s commerce ministry saying Vice Premier Liu He will sign a long-awaited Phase 1 trade deal in Washington next week.
MSCI’s gauge of equity indexes in 49 countries hit an all-time high, as did the pan-regional STOXX 600 index in Europe and the three major stock indexes on Wall Street. The benchmark index in Australia set a record closing high and the main Canadian stock index hit an all-time high.
U.S. President Donald Trump refrained from ordering more military action and Iran’s foreign minister said the missile strikes had “concluded” Tehran’s response.
Trump’s decision helped to soothe markets and increase demand for risk assets, said Brad Bechtel, managing director, Jefferies in New York.
“Trump completely downplayed the idea of going to war with Iran or even any sort of retaliatory measures,” Bechtel said.
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