Risk appetite in global markets rise as geopolitical tensions somewhat ease

Recent developments in the Middle East boosted risk appetite in global markets as US President Donald Trump said attacks against Iran may not last very long, driving November delivery Brent crude oil down 0.5% to $95.1 a barrel.

The US 10-Year Treasury yield dropped two basis points to 4.78% at the same time, supporting global equity markets on Thursday.

New York Fed President John Williams said US inflation continues to slow due to the weakening impact of tariffs and that high energy prices have yet to spill over into other service sectors, helping ease risk aversion, but the ongoing conflict in the Middle East keeps concerns alive.

Meanwhile, US ADP private-sector employment rose by 38,000 in August, below estimates, signaling that the labor market may have stabilized somewhat and that inflationary pressures could slightly ease.

The likelihood of the Fed hiking rates this month fell from 70% to 62% in money market estimates, encouraging investors to turn to riskier assets. The Fed’s Beige Book report showed that economic activity saw a modest increase in recent weeks, while uncertainty over high prices, current policies and international conflicts increased.

At the same time, the Bank of Canada maintained its policy rate at 2.25%.

The US dollar declined 0.2% to 99.4 due to the strengthening of the yen, while gold traded up 1.1% at $4,436 per ounce on Thursday.

Falling US dollar demand and the slowing pace of the rise in oil prices drove up gold prices.

The ounce price of gold is attempting to hold above $4,400 on the back of weak US employment after dipping below $4,300 following the Jackson Hole Economic Symposium.

Silver also climbed 1.3% to $66.2 per ounce at the same time.

The New York Stock Exchange saw a positive trend on Wednesday, with US oil giant Chevron’s shares rising 0.4% after it said it plans to invest $7 billion in Venezuela.

Chipmaker Nvidia’s shares rose 3.2% due to optimism that corporate artificial intelligence demand is on the rise.

The US manufacturing sector’s new order value increased 0.9% on a monthly basis in July.

The Dow Jones Industrial Average gained 0.56%, the S&P 500 rose 0.46%, and the Nasdaq was up 0.45% on Wednesday. US indexes opened Thursday on a positive trend.

Meanwhile, European stock markets traded lower on Wednesday due to geopolitical risks in the Middle East.

Joachim Nagel, president of Germany’s Bundesbank, said the country’s economy is on a path to higher growth based on data from the first two quarters, expecting a growth rate of around 1% in 2026.

German automaker Volkswagen’s shares dropped 3.8% after it was removed from the STOXX 50.

France’s CAC 40 dropped 0.26%, Italy’s FTSE MIB contracted 0.24%, Germany’s DAX 40 lost 0.5%, and the UK’s FTSE 100 fell 0.3% on Wednesday. European indexes began Thursday on a mixed trend.

At the same time, Asian equity markets traded higher near Thursday’s close as the positive trend in the US carried over.

China’s Ratingdog services Purchasing Managers’ Index rose from 50.4 to 51.4 in August, while Japan’s services PMI rose from 52.3 to 52.5 at the same time, indicating a recovery trend in domestic demand in the region.

The US dollar/Japanese yen exchange rate fell 0.6% to 157.7 after Bank of Japan policy board member Hajime Takata said the bank must hike rates to counter inflationary pressures.

While Japanese authorities have yet to confirm currency interventions, investors are looking out for potential actions to strengthen the yen further.

Near Thursday’s close, South Korea’s Kospi rose 0.7%, Japan’s Nikkei 225 increased 0.2%, Hong Kong’s Hang Seng climbed 0.02%, and China’s Shanghai Composite was up 0.4%.