Stocks up, oil down after Trump’s pacifying remarks

NEW YORK: Stocks rose on Wednesday after President Donald Trump spoke about an attack by Iran on an Iraqi airbase that houses American troops, which had led to a massive sell-off in overnight trading, foreign media reported.

The Dow Jones Industrial Average gained 213 points, or 0.8%. The Nasdaq Composite advanced 0.7% and hit an all-time high. The S&P 500 also climbed 0.7% and hit a record high as well. Trump said Iran appeared to be “standing down” after that nation attacked the Ain al-Asad airbase overnight.However, he added the US will “immediately impose additional punishing economic sanctions on the Iranian regime.”

“Now, as the president has to some degree defused some of the anxiety, so you’re getting … a little bit of a sigh of relief rally here,” Art Cashin, director of floor operations at the NYSE for UBS, said on CNBC’s “Squawk Alley.”

The president’s comments pressured safe havens such as gold as investors flocked back into riskier assets. Gold futures for February delivery dropped 0.9% to $1,560 per ounce. Overnight, the precious metal jumped to its highest level in about seven years.

Investors around the globe had been bracing themselves for a bigger conflict between Iran and the US after last week’s killing of Gen. Qasem Soleimani. But so far there have been no reports of casualties from Tuesday night’s airstrikes. The attacks did not target oil infrastructure, boosting investor sentiment as well.

Stocks initially sold off on Friday after news of Soleimani’s death while oil surged, stoking fears of a sharp rise in fuel prices that could dent an already fragile economy. In December, the U.S. manufacturing sector had its biggest contraction in more than a decade.

But Wall Street has history on its side as previous US-Iran crises have seldom led to a prolonged market downturn. Data from Barclays shows that the S&P 500 averages a gain of nearly 3% three months after a confrontation between the two countries. That average gain grows to 5.5% after six months.

At their worst levels in overnight trading, S&P 500 futures were down more than 1.6% along with Nasdaq 100 futures. Dow futures lost more than 400 points overnight.

Earlier, before Trump’s speech, London’s FTSE 100 lost 0.6% to 7,525.48 and Frankfurt’s DAX shed 0.7% to 13,134.26. France’s CAC 40 lost 0.5% to 5,98049.

In Asia, Tokyo’s Nikkei 225 index fell 1.6% to 23,204.76 and Hong Kong’s Hang Seng fell 0.9% to 28,087.92.

The Shanghai Composite Index lost 1.2% to 3,066.89 and South Korea’s Kospi retreated 1.1% to 2,151.31.

Sydney’s S&P-ASX 200 shed 0.1% to 6,817.60 and India’s Sensex shed 0.2% to 40,770.06.

Taiwan, New Zealand and Southeast Asian markets also retreated.

Oil extended losses after Trump hinted at easing tensions, with New York prices sliding 4.6 percent.

WTI, already dropping before Trump spoke, sharply extended its losses to fall under $60 per barrel and Brent crude shed 3.7 percent to $65.78 after the president said Iran appeared to be "standing down" after missile strikes on US troop bases in Iraq.