U.S. stocks opened higher on Monday as investors bet the weekend’s U.S.-led missile attack on Syria would not escalate into a broader conflict, while turning their focus to the earnings season.
The Dow Jones Industrial Average rose 123.01 points, or 0.50 per cent, at the open to 24,483.15. The S&P 500 opened higher by 13.80 points, or 0.52 per cent, at 2,670.10. The Nasdaq Composite gained 47.22 points, or 0.66 per cent, to 7,153.87 at the opening bell.
Canada’s main stock index also opened higher on Monday, driven by gains in financial shares and waning fears of an escalating conflict in Syria.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX Composite Index rose 27.29 points, or 0.18 per cent, to 15,301.26. Seven of the index’s 10 main sectors were in positive territory.
Saturday’s strikes marked the biggest intervention by Western countries against Syrian President Bashar al-Assad and his ally Russia, which is facing further economic sanctions over its role in the conflict.
“The action was well-received ... and that’s giving a chance for investors to focus on macro news and earnings,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“It’s not going to be a negative unless it turns into a bigger conflict. It’s going to be a day where the market is going to attempt to move a bit higher.”
Shares of Bank of America rose 0.8 per cent in early trading after the lender reported a better-than-expected increase in quarterly profit.
Analysts are expecting the S&P 500 companies to record an 18.6-per-cent rise in profit, their strongest earnings growth in seven years, according to Thomson Reuters I/B/E/S.
However, many traders say that reactions to results could be muted as market participants have already priced in gains from corporate tax cuts, reflected in the stock market’s strong rally in 2017 and early 2018.
Waning fears of a broader conflict in Syria pushed short-dated U.S. Treasury yields to their highest level in almost a decade, while crude oil prices eased due to a rise in U.S. drilling activity.
“We’re seeing a little bit of an uptick in yields and pullback in oil, and those are likely to constrain any strong reaction to earnings and macro news,” said Cardillo.
Data on Monday showed U.S. retail sales increased more than expected in March, rising after three straight monthly declines, as households boosted purchases of motor vehicles and other big-ticket items.
Oil recovered some ground on Monday, but prices were still down on the day as investor concern waned about escalating tensions in the Middle East following air strikes on Syria over the weekend.
The United States, France and Britain launched 105 missiles on Saturday, targeting what they said were three chemical weapons facilities in Syria in retaliation for a suspected poison gas attack on April 7.
The oil price had risen nearly 10 per cent in the run-up to the strikes, as investors bulked up on assets, such as gold or U.S. Treasuries, that can shield against geopolitical risks.
Brent crude oil futures were down 51 cents on the day at $72.07 a barrel, having recovered from a session low of $71.11, while U.S. crude futures were down 54 cents at $66.85 a barrel.
“As far as developments in Syria are concerned, the market has had a sigh of relief in the sense that there is no escalation, either diplomatically, or on the ground, following the intervention by the U.S., France and the UK,” said BNP Paribas global head of commodity market strategy Harry Tchilinguirian.
“As a macro asset-allocator, if you want to hedge your portfolio against geopolitical risk, your prime candidate is oil, especially if that risk is in the Middle East.”
Although Syria itself is not a significant oil producer, the wider Middle East is the world’s most important crude exporter and tension in the region tends to put oil markets on edge.
“Investors continued to worry about the impact of a wider conflict in the Middle East,” ANZ bank said.