Markets fall as Biden set for Middle East diplomacy drive

AFP , Tuesday 17 Oct 2023

US and European stock markets mostly fell and oil prices rose on Tuesday as US President Joe Biden prepared for a trip to the Middle East aimed at preventing the Israeli escalation against Gaza from creating a regional war.

President Joe Biden speaks at the Human Rights Campaign National Dinner on Saturday Oct. 14, 2023 in Washington. President Biden is planning a diplomatic drive to prevent the Israel-Hamas conflict becoming a regional war. AFP


Investors also weighed another raft of company earnings and rising interest rates.

Wall Street opened in the red, with the tech-heavy Nasdaq shedding more than one percent, while Frankfurt and Paris fell 0.6 percent afternoon deal.

London's FTSE 100 bucked the trend, rising after official data showed cooler wages growth in Britain, increasing expectations that the Bank of England was done with raising interest rates to fight inflation.

"Understandably, not many people are in the mood to put their hard-earned cash at risk in these uncertain economic times," said Fawad Razaqzada, analyst at and City Index.

All eyes were on Biden's visit to Israel on Wednesday.

His trip comes as Israeli Prime Minister Benjamin Netanyahu lines up forces on the Gazan border ahead of an expected ground invasion as Tel Aviv carries on its grisly retaliation after the deadly October 7 attacks by Hamas militants. Since the attack, the Israeli army has carried out round-the-clock bombardment of the Palestinian enclave for the tenth day.

Biden was to meet Netanyahu, and will also see Jordanian King Abdullah II, Palestinian leader Mahmoud Abbas and Egyptian President Abdel-Fattah El-Sisi, in hopes of finding a way to de-escalate a crisis that threatens the stability of the region.

His visit comes after his Secretary of State Antony Blinken returned for a second time since the attacks, and announced that Israel had agreed to work on civilian aid for Gaza as calls mount to let in vital supplies to avert a humanitarian catastrophe.

The drive to avert a war that could draw in other regional players, including Iran and Lebanon-based Hezbollah, helped push Wall Street higher Monday, with all three main indexes up around one percent.

Stock markets also digested fresh company results.

US investment bank Goldman Sachs reported a 36-percent fall in third-quarter profits at $1.9 billion.

Bank of America reported better earnings than expected in the same quarter, with its net income rising 10 percent to $7.8 billion.

Investors also had their eyes on rising US Treasury yields.

"All moves of course are unfolding against a tense, and highly uncertain, geopolitical backdrop," said Patrick O'Hare, analyst at

Oil up

Oil prices moved within a narrow band after dropping more than one percent Monday, with the commodity also capped by reports that Washington was easing restrictions on Venezuelan crude.

However, the fluid situation kept investors wary that anything could develop in an instant.

"The price action doesn't reflect an improvement in investors' outlook for the Israeli conflict, rather the absence of a significant escalation," said Ian Lyngen, at BMO Capital Markets.

The haven dollar climbed on the eve of Biden's Wednesday trip.

The euro diverged against main rivals after a key survey showed German investor confidence improved more than expected in October.

This was thanks to slowing inflation and growing prospects that the European Central Bank was also done with hiking borrowing costs.

*This story was edited by Ahram Online

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