Global Economy
European Markets Set for a Thursday Rebound as Middle‑East Tensions Drive Oil Higher
European equity indexes are expected to recover at Thursday’s opening after yesterday’s weekly low, a dip spurred by escalating Middle‑East conflict and a surge in oil prices. Futures point to gains for the CAC 40, DAX, FTSE and STOXX 600, while higher oil and renewed geopolitical risk keep bond investors wary of further rate hikes.
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European Markets Poised for a Recovery Amid Rising Middle‑East Tensions
After closing Wednesday at the week’s lowest level, the major European indexes are expected to bounce back at Thursday’s open. The drop was driven by renewed geopolitical friction in the Middle East and a sharp jump in oil prices.
Key forecasts from futures markets suggest the French CAC 40 could open up ~0.9 % after a >2 % decline on Wednesday, while the German DAX is slated for +0.78 %, the UK FTSE +0.4 % and the pan‑European STOXX 600 for +0.8 %.
The escalation in the Middle East threatens to derail hopes of normalising maritime traffic through the Strait of Hormuz and could rekindle inflationary pressures, even though a provisional US‑Iran protocol had recently eased concerns.
U.S. forces have launched a second consecutive night of strikes on Iranian targets, prompting retaliatory attacks on Kuwait and Bahrain. This back‑and‑forth has kept oil prices elevated – Brent closed up 0.97 % at $78.78 per barrel and U.S. WTI rose 0.99 % to $74.25.
Bond markets are reacting as well, with traders again betting on further interest‑rate hikes in response to the heightened geopolitical risk. The Federal Reserve’s June minutes showed several officials favouring an immediate rate increase, while the European Central Bank will release its own meeting minutes later today.