APA Apache Corporation

By Anna Isaac 

Global stocks edged higher as investors expressed relief that oil prices stopped rising following heightened tensions in the Middle East Tuesday.

Futures tied to the Dow Jones Industrial Average were flat.

European and Asian indexes posted gains. The pan-continental Stoxx Europe 600 rose 0.4%, joined by similar climbs in other regional gauges. The Japanese index, the Nikkei 225, closed up 1.6% and China's Shanghai Composite was up 0.7%.

In U.S. premarket trading, energy company Apache Corp.'s shares rose 12.9% after it reported what it termed a significant oil discovery offshore Suriname.

The Pentagon said Monday it plans to send B-52 bombers and additional troops to the Middle East following the targeted killing of Iranian Maj. Gen. Qassem Soleimani in Iraq last week.

Brent crude, the global benchmark for oil prices, dropped 1% Tuesday to $68.24 a barrel after a sharp rally Monday.

There was a muted response to the Middle East tensions because potential discontent in the region had been a backdrop for markets for some time, said James Athey, senior investment manager at Aberdeen Standard Investments. The dynamics of oil supply have also changed, because the Organization of the Petroleum Exporting Countries is less powerful than it was.

"U.S. production is now so large, that it means it's much more difficult for OPEC to flex its muscles over global oil supply," Mr. Athey said. "It would take a huge disruption of supply for a long period of time. You'd likely have to see a very broad increase of tensions across the entire Middle East."

Looser monetary policy from the U.S. Federal Reserve also dampened volatility across markets, he said. "The Fed has also drugged the market into submission. The market doesn't need to price risks properly because the Fed has underwritten risk in markets."

In individual stocks, Danish jewelry seller Pandora A/S climbed 6.5%, adding to gains Monday when it revealed full-year sales figures that included the holiday sales period. Shares in car maker Aston Martin Lagonda dropped 10.5% after it issued a profit warning.

The Chinese yuan reached its strongest level against the dollar since August after the People's Bank of China released figures showing foreign exchange reserves rose to a six-month high at the end of December to $3.108 trillion. A dollar bought 6.9414 yuan.

Later Tuesday, the U.S. Commerce Department is expected to release November trade figures. The data may offer signs of how heavily global trade tensions have weighed on commercial activity. Economists surveyed by The Wall Street Journal estimated there would be a trade deficit of $43.6 billion in November, compared with $47.2 billion in the previous month.

Write to Anna Isaac at anna.isaac@wsj.com

(END) Dow Jones Newswires

January 07, 2020 07:42 ET (12:42 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.