European equities moved lower on Tuesday as investors assessed developments in the Middle East, higher sovereign bond yields and the upcoming Federal Reserve monetary policy decision.
The Stoxx Europe 600 fell 0.4%, while Germany’s DAX declined 0.2%. France’s CAC 40 and London’s FTSE 100 were both down 0.4%, while Italy’s FTSE MIB fell nearly 1%.
Investors were also monitoring calls from technology industry executives for a slower approach to the development of advanced artificial intelligence systems.
Brent Crude Rises Above $113
Brent crude futures increased 1.2% to more than $113 per barrel, extending gains recorded over recent weeks.
Saudi Arabia blamed Iran-backed groups in Iraq for an attack on the country’s East-West oil pipeline. Saudi officials said the resulting disruption could affect supplies equivalent to as much as 4% of global oil consumption.
Separately, Houthi forces in Yemen carried out further attacks on Saudi territory and maritime routes on Monday.
Regional peace talks in Oman were postponed, while uncertainty continued over the timing of a potential reopening of the Strait of Hormuz.
Markets Price 90% Probability of Fed Rate Increase
The Federal Reserve was due to begin its two-day monetary policy meeting on Tuesday, with an interest-rate decision scheduled for Wednesday.
Financial markets were pricing in approximately a 90% probability of a 25-basis-point increase in the federal funds rate.
If implemented, the move would represent the Federal Reserve’s first interest-rate increase since mid-2023.
The meeting follows the European Central Bank’s decision last week to increase its key interest rate by 25 basis points to 2.50%.
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