European equities saw modest movement on Monday morning as investors weighed the geopolitical implications of U.S. airstrikes on Iranian nuclear facilities over the weekend.
By 08:06 GMT, the pan-European Stoxx 600 inched up by 0.04% to 536.74, reflecting a cautiously optimistic tone. Major national indexes, including France’s CAC 40 and Britain’s FTSE 100, remained largely flat, while Germany’s DAX posted a slight gain of 0.1%.
The muted reaction came after President Donald Trump authorized the bombing of three Iranian nuclear sites on Saturday, escalating an already tense situation between Tehran and Israel. Though Iran has yet to officially retaliate, officials in Tehran warned of “permanent consequences” and have intensified strikes on Israeli targets, blaming Israel for initiating the hostilities 11 days earlier.
Iran’s leadership has not ruled out any options, and local media outlets have reported discussions around possibly blocking the Strait of Hormuz—a strategic chokepoint for global oil shipments. There is also speculation that U.S. military installations in the region could be potential targets.
While the situation has escalated, some market participants took a more tempered view. Analysts noted that while Middle East tensions remain high, the immediate uncertainty around whether the U.S. would take military action has now been clarified. For now, markets appear to be betting on a limited scope to the conflict.
Oil Markets Respond with Volatility
Energy traders closely monitored developments, given the threat to global oil flows. Although Brent crude and West Texas Intermediate (WTI) futures initially surged, both pared gains slightly by mid-morning Monday.
At 03:38 ET, Brent crude for August delivery was up 0.8% to $76.11 per barrel, while WTI advanced 0.9% to $74.48.
Concerns persist that any escalation, especially involving the Strait of Hormuz, could disrupt critical oil exports and reignite inflationary pressures, potentially influencing the Federal Reserve’s future decisions on interest rates. Markets will also be watching how Iran ultimately responds—and whether this conflict broadens or remains a contained episode.
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