European stocks climb to their highest this year, while bonds and gold fell, demonstrating markets’ increasing resilience to geopolitical shocks. The yen slid after the Bank of Japan maintained its stimulus plan.
The Stoxx Europe 600 Index was propelled higher by deal activity in media and credit-card services. Treasuries and gold reversed gains from Monday following a probable terror attack in Berlin and the killing of Russia’s envoy to Turkey. The yen approached the weakest since February versus the dollar after the central bank closed a tumultuous year for monetary policy by keeping its yield-curve and asset-purchase programs unchanged.
Markets have showed increasing immunity to terror incidents this year, with initial knee-jerk reactions to buy haven assets after attacks fading quickly. As trading volumes decrease before December holidays and year-end, investors may be loath to veer too far from the underlying market trends that have prevailed since the election of Donald Trump in November, namely favoring stocks and shunning bonds. A so-called fear gauge of volatility in European stocks was at the lowest since 2014.
“The market response to each new terror event is less and less pronounced,” said Mike van Dulken, head of research at Accendo Markets. The move in European stocks “confirms ever-thickening investor skin.”
Source – Bloomberg
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