European stock markets are predicted to decline as investors consider the potential for a broader conflict in the Middle East.
Europe's stock markets are likely to decline slightly on Monday due to the escalating tensions in the Middle East resulting from Israel and Hezbollah's weekend strikes.
IG Index data indicates that the German Dax and Italy's FTSE Mib were both called around 0.2% lower, while Spain's Ibex is expected to open down around 0.13%. Meanwhile, France's Cac 40 is predicted to open flat.
U.K. markets are closed Monday for a national bank holiday.
Over the weekend, tensions between Israel and Lebanon escalated, causing oil prices to rise as fears of a wider conflict in the Middle East intensified.
By 07:20 a.m. London time, Brent crude increased by 0.73% to $79.60, while U.S. West Texas Intermediate crude rose by 0.76% to $75.40 per barrel.
Vivek Dhar, a mining and energy commodities strategist at the Commonwealth Bank of Australia, stated that while market expectations anticipate Iran's attack targeting Israel without sparking a broader regional conflict, Israel's response will be equally crucial. Moreover, Israel's response may entail an attack on Iran's oil supply and related infrastructure, which would endanger 3-4% of global oil supply.
In the U.S., stock futures remained unchanged after Jerome Powell, the chair of the Federal Reserve, hinted that interest rate cuts were imminent. Despite not providing a specific date, the CME Group's FedWatch Tool indicates that traders expect a cut at the Fed's next meeting on September 18.
In the Asia-Pacific region, markets were mixed, with Japan's Nikkei 225 down 1.09%, the Hong Kong Hang Seng index up 0.99%, and the mainland Chinese CSI 300 index down 0.15%.
Investors will closely monitor the minutes from Sweden's Riksbank and Ifo Business Climate data on the European calendar.
The European Central Bank will closely monitor the release of euro zone inflation data on Friday to determine whether to cut rates further next month.
— CNBC's Lim Hui Jie contributed to this report.
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