The Federal Reserve announced the results of its annual bank stress tests, showing the 18 largest financial institutions would suffer losses but still have enough of a capital buffer to continue operating
The world's stock markets mostly ticked upwards on Monday as investors moved cautiously at the start of a busy week packed with key interest rate decisions, in particular from the US Federal Reserve.
The indices in London and Paris closed modestly ahead after Hong Kong stocks rallied, with investors there cheering a decision by the city to suspend plans to push through a controversial extradition law.
Wall Street also advanced as traders took a breather ahead of the Group of 20 summit next week, where US President Donald Trump and his Chinese counterpart Xi Jinping are due to hold hotly-awaited talks on their long-running trade war.
One of those swirling headlines is the ongoing tension between the US and Iran. On Monday Tehran announced its uranium stockpile will soon pass the limit set under a nuclear deal that Washington abandoned last year.
The news exacerbated an already strained relationship after the US blamed Iran for two tanker attacks in the Gulf of Oman last week, claims that Tehran calls "baseless."
"Tensions in relation to trade and the Iranian situation still persist and they are hanging over stock markets," said analyst David Madden at trading firm CMC Markets UK.
- Fed U-turn? -
Naeem Aslam at London-based trading firm ThinkMarkets said this week "the focus is going to remain on central banks and their monetary policies."
The US central bank will unveil its monetary policy announcement on Wednesday, followed by both the Bank of Japan and the Bank of England on Thursday.
The Fed is not expected to shift course this week, but could signal a rate cut down the road.
"Anything less than a clear signal that the Fed is open to cutting rates soon in response to building downside risks to the US economic outlook could leave financial markets disappointed," noted MUFG currency analyst Lee Hardman.
"The US rate market is well priced for at least a (quarter-point) rate cut to be delivered by July."
- 'Cooler heads' in Hong Kong -
In Hong Kong, investors returned to buying after three days of losses that saw the Hang Seng drop more than two percent following protests against the law -- which would have allowed extradition to China -- turned violent on Wednesday.
Another peaceful demonstration Sunday saw around two million people take to the streets, according to organizers.
The plan had also spooked business leaders who feared it would damage the city's reputation as an international business hub.
Traders "will breathe a loud sigh of relief today, as on Wednesday when tear gas and rubber bullets were filling the air, the markets were getting extremely jittery that this ticking time bomb was about to explode", said Stephen Innes, managing partner at Vanguard Markets.
"Fortunately, cooler heads prevailed."
Among individual stocks, shares in Sotheby's auction house soared by more than 58 percent after the company announced it would be acquired by French telecoms and media mogul Patrick Drahi.
Facebook shares rose 4.2 percent as the world's biggest social network prepares to outline details on Tuesday of a virtual currency launching next year.
- Key figures around 2050 GMT -
New York - Dow: UP 0.1 percent at 26,112.53 (close)
New York - S&P: 500: UP 0.1 percent at 2,889.67 (close)
New York - Nasdaq: UP 0.6 percent at 7,845.02 (close)
London - FTSE 100: DOWN 0.2 percent at 7,357.31 (close)
Frankfurt - DAX 30: DOWN 0.1 percent at 12,085.82 (close)
Paris - CAC 40: UP 0.4 percent at 5,390.95 (close)
EURO STOXX 50: UP 0.1 percent at 3,383.21 (close)
Tokyo - Nikkei 225: UP less than 0.1 percent at 21,124.00 (close)
Hong Kong - Hang Seng: UP 0.4 percent at 27,227.16 (close)
Shanghai - Composite: UP 0.20 percent at 2,887.62 (close)
Euro/dollar: UP at $1.1217 from $1.1208 at 2100 GMT
Pound/dollar: DOWN at $1.2532 from $1.2589
Dollar/yen: DOWN at 108.53 yen from 108.56 yen
Oil - Brent North Sea: DOWN $1.07 at $60.94 per barrel
Oil - West Texas Intermediate: DOWN 58 cents at $51.93 per barrel