Markets Stabilize with War Rhetoric Reined

By Joyce Yu

Philadelphia, PA–Global equities recovered from losses yesterday as investors speculated Middle East tensions won’t erupt into a destabilizing conflict. Wall Street stocks are higher with the Dow gaining 1.3%.

“The short-term geopolitical fear has been the dominant theme over the last 24 hours, overshadowing an in-line US CPI [inflation] print and a slightly hawkish set of Fed minutes,” said Jim Reid of Deutsche Bank.

Data released on Thursday showed new applications for U.S. unemployment benefits fell last week, pointing to sustained labor market strength despite a sharp slowdown in job growth in March. Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 233,000 for the week ended April 7. This is still falling short of the 230,000 estimate polled by the Reuters.

The economy created 103,000 jobs in March, the fewest in six months. But the labor market is considered to be near or at full employment with the unemployment rate remaining at a 17-year low of 4.1%, close to the Federal Reserve’s forecast of 3.8% by the end of this year.

Minutes of the U.S. central bank’s latest meeting presented an upbeat assessment of the jobs market, noting that “most participants described labor market conditions as strong”, with some districts showing signs of “continuing shortages of workers in segments of the labor market.”

BlackRock Chairman and CEO Larry Fink told CNBC on Thursday that investors should never try to time the market and always be invested, saying “The key for investors is to stay in the market. … You should be 100 percent in equities.” Having hit record highs on Jan. 26, U.S. stocks went into correction territory and have been traded in wild swings.

Back to the Middle East tensions, Putin’s spokesman said that the Russian and U.S. militaries are maintaining contact via a telephone hotline. Frants Klintsevich, a senator who’s a member of the upper house’s defense and security committee, told the Bloomberg that, “If these strikes start, it could end very tragically and it’s impossible to predict the outcome.”

So far, American allies have responded differently. French President Emmanuel Macron said that there’s proof that Syrian leader Bashar Al-Assad’s regime used chemical weapons and the allies are working to decide what response would be “useful and efficient.”

U.K. Prime Minister Theresa May called an emergency Cabinet meeting for Thursday to discuss the British response, while German Chancellor Angela Merkel ruled out participating in any military action. At the same time, she made clear that Germany wouldn’t stand in the way of a response by its allies.

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