European Shares Poised For Weak Start Amid Middle East Tensions

European stocks are seen opening on a sluggish note Monday as inflation concerns returned to the fore.

Oil prices jumped nearly 4 percent as Hamas’ Saturday surprise attack on Israel threatened to inflame tensions in the Middle East, home to almost a third of global supply.

Over 1,100 people have been killed in Israel and Gaza, following the deadly attack on Israel.

Iran denied any direct involvement in the attack but backed Hamas’s actions as an act of self-defense.

Israeli military said it targeted over 800 locations of Hamas in Gaza since the beginning of the escalation.

Analysts say that there is no immediate threat to oil supplies, but the market could threaten if the conflict escalates.

Uncertainty around the Fed’s interest-rate hikes may also weigh on sentiment after stronger-than-expected U.S. jobs data complicated the future path of interest rate rises in the world’s biggest economy.

Bond traders are betting historic sums on the outcome of the Fed’s next policy meeting on Oct. 31-Nov. 1.

On Saturday, Fed Governor Michelle Bowman said that there has been notable progress in curbing inflation, but the levels remain worryingly high – underscoring the need for further rate hikes.

Asian stocks were mostly lower in thin trade, with markets in Japan and South Korea closed for holidays. The morning session was cancelled in Hong Kong after a typhoon warning.

Gold gained along with the dollar on safe haven bids, while oil prices jumped more than $4 a barrel, after having posted their biggest weekly loss since March amid demand concerns.

In economic releases, German industrial production data and Eurozone Sentix investor confidence survey results may attract investor attention later in the day.

China’s trade balance and CPI data, U.K. GDP figures and Eurozone industrial production numbers may sway market sentiment as the week progresses.

Across the Atlantic, reports on consumer and producer price inflation along with the release of the minutes of the U.S. Federal Reserve’s FOMC meeting held in September will be key.

U.S. earnings will also be in the spotlight, with financial giants Citigroup, JPMorgan Chase and Wells Fargo due to unveil their financial results later in the week.

U.S. stocks rose sharply on Friday after data showed the economy added 336,000 jobs in September compared to estimates for an increase of about 170,000 jobs.

The report also showed notable upward revisions to the July and August job gains, triggering a sharp hike in Treasury yields.

However, yields pulled back well off their highs after wages rose less than expected last month.

The S&P 500 rose 1.2 percent to snap a four-week losing streak, while the Dow gained 0.9 percent and the tech-heavy Nasdaq Composite jumped 1.6 percent.

European stocks closed firmly in positive territory on Friday after suffering a setback around mid-afternoon on concerns about the outlook for U.S. interest rates.

The pan European STOXX 600 advanced 0.8 percent. The German DAX rallied 1.1 percent, France’s CAC 40 climbed 0.9 percent and the U.K.’s FTSE 100 added 0.6 percent.

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