European stocks are opening mostly lower to start the week, as another surge in oil prices adds to inflation worries and keeps pressure on global risk sentiment.
- Eurostoxx -0.6%
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Germany DAX -0.3%
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France CAC 40 -0.4%
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UK FTSE +0.3%
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Spain IBEX -0.3%
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Italy FTSE MIB -0.5%
The main story in markets remains that of higher oil prices and higher bond yields.
Brent crude is trading up over $107 with WTI crude above $102, after renewed attacks on Saudi energy infrastructure and further threats to shipping routes around the Middle East. That is reinforcing concerns that the energy shock will keep inflation pressures elevated for longer.
And that signal is particularly amplified with the Fed meeting decision coming up this week. Markets are now pricing roughly an 87% probability of a Fed rate hike, following hotter US inflation data and the latest jump in energy prices.
Besides that, US 10-year Treasury yields are hovering close to 5% and that is creating another valuation headwind for equities. And that is reflected in the more defensive tone in US equities too.
S&P 500 futures are down by 0.6% with Nasdaq futures down around 1.5%, as investors have to contend with the mix of elements above in preparation of the Fed on Wednesday.
It’s all pointing to a more risk-off mood across broader markets with the US dollar sitting higher, stocks lower, and precious metals also dropping to start the session.
This article was written by Justin Low at investinglive.com.