30th March, Reuters – The main European stock markets are expected to open in the red on Monday, as investors brace themselves to deal with a long-standing conflict in the Persian Gulf. The war has already led to a record monthly increase in oil prices, reigniting fears of inflation surge and posing a risk of recession to a large part of the globe.
According to the initial indications available, the Paris CAC 40 could lose 0.48% at the opening.
Futures contracts suggest a 0.69% drop for the Frankfurt DAX, 0.29% for the London FTSE, and 0.72% for the EuroStoxx 50.
Donald Trump stated in an interview with the Financial Times published on Sunday night that the United States could “take Iranian oil,” threatening to confiscate the Kharg rule, crucial for Iranian oil exports, while asserting that negotiations with Iran were going “very well.”
Washington is negotiating directly and indirectly with Tehran, also declared the American president to journalists on Air Force One, saying he believes an agreement could be reached very soon, without ruling out the possibility that the discussions may not yield any results.
As the conflict triggered by US and Israeli airstrikes in Iran has been raging for over a month, several regional countries, along with Pakistan, have come together to discuss proposals to end the war.
Islamabad announced that it is preparing to host “meaningful discussions” between the conflict parties in the coming days, without confirming if the United States and Iran had agreed to participate.
For the first time since the conflict began, Yemen’s Houthis, allies of Tehran, fired missiles at Israel on Saturday, raising fears of further escalation of the conflict.
Furthermore, the European Central Bank (ECB) is determined to act in response to the inflation pressures stemming from the rise in energy prices related to the conflict in the Middle East, but it is premature to discuss a timeline for potential interest rate hikes, stated the governor of the Bank of France, François Villeroy de Galhau, to the Italian newspaper La Stampa.
Federal Reserve Chairman Jerome Powell will have the opportunity to share his perspective at an event scheduled later in the day on Monday, while the highly influential New York Fed President, John Williams, will also speak.
STOCKS TO WATCH: [L8N40F1PJ]
ON WALL STREET
The New York Stock Exchange ended sharply lower on Friday, with weaknesses in mega-cap stocks dragging the three major indices to their lowest closing levels in over six months, as the conflict in the Middle East continues to dampen risk appetite.
The Dow Jones fell 1.73%, or 793.47 points, to 45,166.64 points. The broader Standard & Poor’s 500 lost -108.31 points, or -1.67%, to 6,368.85 points. The Nasdaq Composite retreated by -459.72 points, or -2.15%, to 20,948.357 points.
IN ASIA
The Tokyo Stock Exchange dropped by 3.35%, erasing its gains for the year in a wave of widespread selling in the region, while benchmark bond yields briefly hit their highest level in 27 years before falling back, with the escalation of the Middle East conflict rekindling fears of stagflation.
Chinese and Hong Kong stock markets also tumbled, with the war weighing on risk appetite.
The Shanghai Composite Index rose by 0.23% and the CSI 300 of large caps declined by 0.15%.
The Hong Kong stock exchange fell by 0.9%.
RATES / CURRENCIES
The yield on the ten-year Treasuries dropped by 4.6 basis points to 4.3939%. The two-year yield fell by 3.5 basis points to 3.8811%.
The US dollar remained mostly stable on Monday, on track to register its strongest monthly gain since July, as investors worry about the repercussions of a prolonged conflict in the Middle East.
The dollar lost 0.05% against a basket of reference currencies.
The euro gained 0.05% to $1.1514.
CRUDE OIL
Oil prices continue to rise on Monday, with Brent set to record a record monthly increase, as the Yemeni Houthis launched their first attacks against Israel over the weekend, escalating the conflict between the United States and Israel against Iran in the Middle East.
Brent gained 2.56% to $115.45 per barrel, and West Texas Intermediate (WTI) crude advanced by 1.74% to $101.37.
KEY ECONOMIC INDICATORS ON THE 30th MARCH AGENDA:
COUNTRY GMT INDICATOR PERIOD CONSENSUS PRIOR
EZ 09:00 Economic sentiment March 96.8 98.3
and business climate
DE 12:00 HICP consumer prices March
(flash)
– month-on-month 1.0% 0.2%
– year-on-year 2.7% 1.9%
(Reporting by Mara Vilcu, Editing by Augustin Turpin)
by Mara Vilcu
