Equities: Cautious start anticipated after US-Iran tensions – Danske Bank
Equity Markets Set for Sharp Decline Amid Rising Oil Prices
Analysts from Danske Research anticipate that stock markets will open over 1% lower, following significant losses in Asia after unsuccessful US-Iran negotiations led to a surge in Brent crude prices. The bank highlights that European indices, which outperformed on Friday, are likely to experience a downward adjustment today, even though last week saw strong investor interest in cyclical stocks and semiconductors compared to defensive sectors.
Futures Indicate Weak Start
Brent crude oil jumped above $100 per barrel on Monday morning, as talks between the US and Iran over the weekend failed to yield an agreement.
Stock futures are signaling a drop of more than 1% at the open, reflecting the widespread sell-off seen across Asian markets following the breakdown in US-Iran discussions.
While US markets had already ended lower on Friday—with the S&P 500 slipping 0.1% and high-yield credit down 0.4% despite positive inflation data—European indices performed better. The Stoxx 600 gained 0.4% and the OMX Nordic climbed 1.3%. This divergence suggests that European markets may see a sharper negative reaction today as they realign with global trends.
Notably, the technology sector stood out as one of the strongest performers in the US on Friday, even as software stocks continued to decline. The resilience of semiconductor shares could offset some of this weakness, which aligns with the research team's outlook.
Materials and real estate sectors also posted gains, whereas defensive industries such as health care and consumer staples faced declines. This pattern indicates that risk-taking remained prevalent among investors throughout the previous week, despite the negative market close.
As a result, equities and equity futures are trading in negative territory, while the US dollar has strengthened slightly.
(This report was produced with the assistance of artificial intelligence and reviewed by an editor.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
XRP, NEAR, Zcash, Cardano fall further as support levels face fresh risk
AMD (AMD.US) Q3 revenue hits record $13.4 billion, Lisa Su forecasts 66% growth for Q4
AMD's Q3 revenue reached $13.377 billion, exceeding expectations, with data center business accounting for 64% of the total. Lisa Su stated that demand remains strong, and Q4 revenue guidance is around $17 billion, a year-on-year increase of 66%. After-hours stock price once rose over 9%.
Alcoa (AA.US): Subsequent resumption of production in the Middle East is expected to be more gradual, and new capacity planned before the war may be difficult to implement
Middle Eastern production resumption can increase supply, but the recovery speed depends on the actual economic viability of production.
Democrats achieve a landslide victory, global stock markets "plunge before rebounding," gold and silver surge—what is the market trading on?
Behind this "sharp drop followed by a rebound" in the market is a rational correction after the rapid repricing of the political landscape. Trump's veto power provides a two-way check and balance, making policy gridlock the most likely outcome, thus calming panic sentiment. However, the duration of election-driven market volatility has historically been limited; the future of the AI theme and geopolitical developments are the core variables driving the market towards the end of the year.
Crypto prices
More
