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European markets opened lower on Monday as investor sentiment remained cautious amid rising oil prices and political tensions in the Middle East.
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At the time of writing, Germany’s DAX was down about 0.41%, the FTSE 100 was down very slightly, by 0.1%, and France’s CAC 40 was also down, down 0.21%.
A weak start was followed by losses in Asia, where many shares fell overnight as worries continued to rise in oil prices and the possibility of a major escalation in the US-Iran war.
“The timing has been very worrying since the first few days of the war, and reports of US troops in the vicinity of 50,000 suggest that a ground attack may be imminent, despite the President’s protestations to the contrary and more in the agreement and refusing to leave Iran. Price pressure around the world,” Richard Hunter, head of markets at Interactive Investor, said in an email comment sent to Euronews.
The decline follows strong losses on Wall Street on Friday, which marked the fifth consecutive loss – the longest streak in nearly four years.
“US equity markets remained under constant pressure, with the S&P 500 down 2.1% for the week and the Nasdaq 100 sliding 3.2%. The Dow Jones stood up comparatively well, down 0.9%, due to its technology weight. 10% below their peaks,” IG market analyst Fabien Yip said in a commentary report.
Asia-Pacific markets are down overnight
Japan’s benchmark Nikkei 225 fell 4.5% in early trade, Australia’s S&P/ASX 200 fell 1.2%, and South Korea’s Kospi fell 3.2%. Hong Kong’s Hang Seng fell 1.7%, while the Shanghai Composite fell 0.7%.
Investors’ concerns have been heightened by the risk of disruption of access to the Strait of Hormuz, an important route for global oil exports.
Benchmark Brent crude rose above $116 a barrel in early trade, marking a more than 50% increase since the Iran war began on February 28. Prices were slightly above $70 a barrel when the war began. US benchmark crude was also higher, at around $101 a barrel, reflecting continued uncertainty in global energy markets.
The increase comes as US President Donald Trump raised the possibility of US forces seizing Iran’s Kharg Island, the country’s main oil hub in the Persian Gulf. He said this in an interview published on Monday by the Financial Times.
“Maybe we take Kharg Island, maybe we don’t. We have a lot of options,” Trump told the newspaper. It would also mean we have to be there (Kharg Island) for a while.”
Asked about Iran’s security there, he said: “I don’t think they have security. We can easily take it.”
The US has launched airstrikes which it says are targeting military positions on the island. Iran has threatened to launch its own ground attack on the Gulf Arab states and new attacks if US forces reach its territory.
Meanwhile, G7 finance ministers, energy ministers and central bank governors are set to hold an emergency meeting today to discuss the conflict and its consequences. It will be the fourth time since the start of the war in Iran that the G7 has met at ministerial level.
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