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LONDON (Alliance News) - UK and European stock markets are gaining across the board Tuesday, while US futures markets also point higher, as concerns about a US-led military strike on Syria have been pushed to the back burner. Having weighed on stocks in recent days, the political process has delayed any action in Syria, and the debate over the issue goes on in Washington and other capitals.
Ahead of the opening bell in New York, UK indices all trade higher. Following the recent trend, small-cap stocks are out performing large again. The FTSE 100 is up 1.0%, the FTSE 250 1.4% and the FTSE ALL-Share 1.5%.
Brent Oil has softened to USD112.1 per barrel, about 3.5% down in the last 24 hours. This is proving the main driver of sector moves Monday, causing airline stocks to soar while oil and producers struggle. EasyJet and International Consolidated Airlines continue to lead the FTSE 100 higher, up 6.7% and 4.5%, respectively, as the profit warning from Ryanair that caused a sector sell off last week seems long forgotten.
The pound has found some resistance close to its mid-June high of 1.5751 against the dollar but remains strong, trading in a tight range either side of USD1.57 for most of the day. The biggest risk event for the pound so far this week will be on Wednesday morning, with the release of UK unemployment numbers at 0830BST.
The US Redbook, a leading weekly index of retail sales, came in at 4.6% year on year, slightly missing forecasts of 4.7%. The number hasn't dented the prevailing sentiment of the day though. Leading up to the open of the US markets, pre-market trading is indicating a higher open all round, with the Dow, S&P and the Nasdaq all about 0.6% higher. Traders in the US are also excited about the much-anticipated Apple event Tuesday afternoon, at which the company is expected to unveil its new i-Phone.
With France drafting a resolution to be introduced at the UN Security Council demanding that Syria comply with the Russian proposal to put its chemical weapons under international control, markets are being lifted by the hope that diplomatic efforts will mean military action is avoided.
However, the issue will not be far from anyone's mind, as US President Barack Obama takes to the airwaves later on Tuesday to address the nation. Having stated that the only hope of Syria's President Assad agreeing to Russia's proposal is if he believes the alternative to be a military strike on his country, Obama is still expected to make a strong case for Congress to authorise action.
Also worth noting is the continued slow rise of global bond yields. The 10-year gilt now yields 3.02%. Most economists still expect a small taper of the US monetary-easing program after the next FOMC meeting on September 18, with Credit Suisse suggesting the only thing that will keep the Fed from tapering this month would be missile strikes on Syria.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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