30 March (Reuters) – Major European Stock Markets are expected to open slightly lower on Monday, with investors gearing up to face a prolonged conflict in the Persian Gulf following the initial attacks by the Houthis on Israel over the weekend, as oil prices hit records, reviving fears of inflation and raising the risk of a recession for much of the globe.
According to early indications, the Paris CAC 40 could open down by 0.17%.
Futures contracts suggest a 0.24% decrease for the DAX in Frankfurt, a 0.03% drop for the FTSE in London, and a 0.28% decline for the EuroStoxx 50.
Donald Trump stated in an interview with the Financial Times on Sunday evening that the United States might “take Iranian oil,” hinting at seizing the Kharg terminal crucial for Iranian oil exports, while also mentioning that negotiations with Iran were “going very well.”
Washington is reportedly engaging in direct and indirect talks with Tehran, as confirmed by the American president to journalists aboard Air Force One, expressing hope for an imminent agreement while not ruling out the possibility of talks failing.
As the conflict triggered by US and Israeli strikes in Iran enters its second month, regional countries have come together in Pakistan to discuss proposals aimed at ending the war.
For the first time since the conflict began, the Houthi rebels from Yemen, allies of Tehran, launched missiles at Israel on Saturday, fueling concerns of further escalation.
This military, political, and religious intervention by the Houthi movement extended the oil price surge on Monday, with Brent crude hovering around $115 per barrel.
“The market has largely ignored the prospect of a negotiated end to the war, despite Trump’s claims of ‘direct and indirect’ ongoing talks with Iran, and is bracing for a significant escalation of military hostilities, which is bullish for crude oil, with very high uncertainties about the timing and nature of the outcome,” explained Vandana Hari, founder of oil market analysis provider Vanda Insights.
Meanwhile, the European Central Bank (ECB) is committed to taking action to address inflation pressures stemming from the energy price surge linked to the Middle East conflict, but the governor of the Bank of France, François Villeroy de Galhau, cautioned against mentioning a timetable for possible interest rate hikes.
Federal Reserve Chairman Jerome Powell is expected to share his perspective later on Monday at an event, while the influential New York Fed director, John Williams, will also speak.
STOCKS TO WATCH: [L8N40F1PJ]
ON WALL STREET
US stock markets ended sharply lower on Friday, with weaknesses in mega-caps dragging all three indices to their lowest closing levels in over six months, as the ongoing Middle East conflict continues to dampen risk appetite.
