Middle East Flare-up Seen Dragging Down European Stocks

(RTTNews) - Efforts to restore shipping traffic through the Strait of Hormuz and the resultant escalation in tensions in the Middle East are expected to weigh on stock markets in Europe on Tuesday. A muted opening is expected while markets assess the threats to the four-week ceasefire between the US and Iran. Corporate earnings updates are also expected to sway market sentiment.

Wall Street had closed on a negative note on Monday amidst an escalation in tensions in the Middle East. The Dow Jones Industrial Average slipped 1.1 percent to finish trading at 48,941.90. The S&P 500 also declined 0.41 percent to finish trading at 7,200.75. The tech-heavy Nasdaq Composite also shed 0.19 percent to close trading at 25,067.80.

Major European markets had finished trading on a negative note on Monday. The pan-European Stoxx-50 plunged 2.2 percent to finish trading at 5,753.36. France's CAC 40 erased 1.7 percent to close at 7,976.12. Germany's DAX dropped 1.24 percent to end Monday's trading at 23,991.27. Switzerland's SMI also recorded a decrease of more than 1 percent to close trading at 13,003.33. Equity markets in U.K. were closed for a holiday.

Current indications from the European stock futures indicate a mostly weak sentiment. The FTSE 100 Futures (Jun) has dropped 0.84 percent. The SMI Futures (June) is trading 0.32 percent lower. The DAX Futures (Jun) is trading 0.21 percent lower. The pan-European Stoxx 50 Futures (Jun) is trading 0.08 percent higher. The CAC 40 Futures (May) is trading 0.06 percent higher.

American stock futures are trading in mildly positive territory. The US 30 (DJIA) is trading 0.20 percent higher, whereas the US500 (S&P 500) is trading 0.28 percent above the flatline.

Asian stock markets are trading on a mostly negative note. Hong Kong's Hang Seng has dropped 1.5 percent whereas India's Nifty 50 is trading 0.72 percent below the flatline. Australia's S&P ASX 200 has dropped 0.41 percent amidst Reserve Bank of Australia's widely expected quarter percentage rate hike. DJ New Zealand has however gained 0.55 percent. Equity markets in China, Japan and South Korea are closed for a holiday.

The Dollar Index, a measure of the U.S. dollar's strength relative to six currencies, is currently trading at 98.51, gaining 0.14 percent from 98.37 at the previous close. The EUR/USD pair has slipped 0.08 percent to trade at 1.1683 whereas the GBP/USD pair has dropped 0.10 percent to trade at 1.3522. The USD/CHF pair has gained 0.09 percent to trade at 0.7844. The EUR/GBP pair is trading 0.01 percent higher at 0.8640. The EUR/JPY pair has slipped 0.07 percent to 183.74 and the GBP/JPY pair has slipped 0.05 percent to 212.66.

Gold futures for June settlement have gained 0.22 percent from the previous closing level of $4,533.30. It is currently trading at $4,543.45.

Both the crude oil benchmarks have retreated after Monday's surge. Brent Crude Futures for July settlement is trading at $113.21, around 1.1 percent lower than $114.44 at the previous close. WTI Crude Futures for June settlement is currently at $104.27, more than 2 percent lower than $106.42 at the previous close.

Among economic data releases, inflation readings for April are due from Switzerland. Major updates to earnings due from the region on Tuesday include Advanced Micro Devices, HSBC Holdings, Eaton Corporation, Pfizer, AXA, Marathon Petroleum Corp, Infineon Technologies, American Electric Power Co, Lumentum Holdings, Occidental Petroleum Corp, Larsen & Toubro, ALK-ABELLO, Ferrari, Electronic Arts, etc.