European stock markets set for a cautious start as US-Iran talks stall
The price of oil is rising sharply
European stock markets are set to start the week on a cautious note. On the one hand, the markets are under pressure from a further rise in oil prices following the deadlock in negotiations between the United States and Iran, whilst attention remains firmly focused on government bond yields.
On the other hand, prices are being buoyed by the resilience of economic activity, thanks in particular to investment in artificial intelligence, which points to a new round of strong corporate results. On the monetary policy front, meanwhile, the market considers a further Fed rate rise next month to be 68% likely, according to CME FedWatch data. Eurostoxx 50 futures are thus up 0.27 per cent, whilst contracts on the Milanese FTSE MIB are down 0.47 per cent.
In the foreign exchange market, the dollar remains close to its two-month highs and is trading at 1.1377 to the euro, down from 1.1395 at Friday’s close. The greenback is also trading at 157.65 yen (up from 157.33), whilst the euro/yen exchange rate stands at 179.34 (up from 179.30).
On the energy front, as mentioned, the price of oil is rising sharply after US President Donald Trump rejected Iran’s proposal for a truce and Tehran announced in response that it would not relax the conditions for the reopening of the Strait of Hormuz. The November WTI futures contract rose by 2.03 per cent to $94.29 per barrel, whilst the Brent contract for the same month gained 3 per cent to $107.45. Natural gas is up 1.2 per cent, trading at €72.9 per megawatt-hour on the TTF platform in Amsterdam.
