The increasing instability in the Middle East has added a new volatility layer to the already sensitive global market.
By the 0710 GMT, the Pan-European Stoxx 600 index had dropped by 0.8% to score 542.38 points, reversing Monday’s short rebound following a loss of five straight sessions.
The conflict has stimulated the global commodity market, particularly oil. The gross price was initially etched high after tensions rose, but later pulled back. Despite the overall decline in European stocks overall, energy stocks rose 0.3%, surpassing the broader indicators, with investors aside from potential supply disruptions.
Gas prices will rise
Natural gas prices in Europe have been higher as traders have the potential escalation of war and the risk of global energy supply.
According to the Al Mayadeen TV English website, benchmark futures rose 1.8% after a choppy trading in the previous session, according to Bloomberg.
Although Europe currently has a proper gas supply, each time global political tensions disrupt international energy trade, a strong dependence on the global liquefied natural gas (LNG) market becomes vulnerable to price volatility. The continent will also need to secure additional LNG in the coming months. This has dropped to its lowest level in three years this winter.
The frontline futures of the Netherlands, a European gas benchmark, rose 0.6%% to 38.12 euros by 8:52am in Amsterdam.
Markets rattle after President Donald Trump called on Iranian civilians to evacuate Tehran and cited allegations of rejection of the proposed nuclear deal.
Trump’s early exit from seven groups in Canada today encouraged speculation of deepening involvement in the conflict, but he later insisted that the move was ceasefire negotiations and “nothing to do.”
Lead losses in telecom stocks, Trump’s exit adds to market anxiety
Almost all sectors traded in red, with telecom stocks leading the decline, down 1.4%. The uncertainty stemming from the war with Iran has limited diplomatic clarity from the US and the G7, and has placed emphasis on sentiment throughout the European exchange.
Of the individual stocks, London’s Ashted was one of the highest percentage acquirers despite forecasting slowing down rental income growth.
As the Israeli attacked war with Iran continues without any signs of emissions, market watchers expect further risk aversion to global stocks and increased pressure on central banks, hoping geopolitical disruption will be factored into perspective.
MNA