Oil, Bonds Seen Pressuring European Market Sentiment

(RTTNews) - Stock markets in Europe are expected to open on a mildly positive note on Tuesday. However, sentiment is likely to be impacted by the surge in crude oil prices and the spike in bond yields. Worries about artificial intelligence is also expected to weigh on sentiment.

Wall Street had closed on a negative note on Monday, as the U.S.-Iran impasse weighed on market mood. The spike in crude oil prices and the surge in bond yields exacerbated the bearish sentiment. The Dow Jones Industrial Average dropped 0.67 percent to finish trading at 51,481.51. The S&P 500 lost 0.77 percent to finish trading at 7,683.69. The tech-heavy Nasdaq Composite shed 0.92 percent to close trading at 26,820.38.

Major European markets had finished trading on a mixed note on Monday even as markets digested the geopolitical situation in the Middle East, the disruptions to crude oil supplies through the Strait of Hormuz as well as the rise in global bond yields. The pan-European Stoxx-50 rallied 0.10 percent to finish trading at 6,309.35. Germany's DAX lost 0.13 percent to end trading at 25,374.42. France's CAC 40 edged up 0.01 percent to close at 8,078.48. Switzerland's SMI edged down 0.02 percent to close trading at 13,942.91. U.K.'s FTSE 100 slipped 0.10 percent to finish trading at 10,684.88.

Current indications from the European stock futures indicate a positive sentiment. The CAC 40 Futures (Oct) has rallied 0.32 percent. The FTSE 100 Futures (Dec) has gained 0.22 percent from the flatline. The pan-European Stoxx 50 Futures (Dec) is trading 0.17 percent above the flatline. The DAX Futures (Dec) is trading 0.05 percent above the flatline. The SMI Futures (Dec) is however trading 0.24 percent below the flatline.

American stock futures are trading in negative territory. The US 30 (DJIA) is trading 0.10 percent lower, whereas the US500 (S&P 500) is trading 0.15 percent below the flatline.

Asian stock markets are trading on a mostly negative note as higher oil prices, elevated global bond yields and weakness in technology stocks weighed heavily on sentiment. Japan's Nikkei 225 has lost 1.4 percent. South Korea's KOSPI has plunged 1.1 percent. Hong Kong's Hang Seng has slipped 0.88 percent. DJ New Zealand has shed 0.61 percent. China's Shanghai Composite has however added 0.06 percent. Australia's S&P ASX 200 has also rallied 0.19 percent amidst the widely expected quarter percentage rate hike by the Reserve Bank of Australia.

Amidst a 72.5 percent likelihood of another rate hike by the Federal Reserve in October, the U.S. dollar has extended gains. The Dollar Index, a measure of the U.S. dollar's strength relative to six currencies, is currently trading at 101.31, rallying 0.11 percent from 101.20 at the previous close.

The EUR/USD pair has slipped 0.10 percent to trade at 1.1360 whereas the GBP/USD pair has dropped 0.16 percent to trade at 1.3236. The USD/CHF pair has rallied 0.22 percent to trade at 0.8334. The EUR/GBP pair is trading 0.08 percent higher at 0.8583. The EUR/JPY pair has slipped 0.01 percent to 178.95, and the GBP/JPY pair has dropped 0.08 percent to 208.49.

Both the crude oil benchmarks have surged amidst persistent fears about supply disruptions in the Middle East. Brent Crude Futures for December settlement is trading at $99.79, around 2 percent higher than $97.83 at the previous close. WTI Crude Futures for November settlement is currently trading at $94.25, having rallied 1.8 percent from $92.60 at the previous close.

Gold dimmed amidst strong rate hike expectations from the Federal Reserve as well as bond yields hovering around multi-decade highs. Gold futures for December settlement have slipped 0.19 percent from the previous closing level of $4,168.40. It is currently trading at $4,160.45.

Among economic data releases due from the region on Tuesday are KOF Leading Indicators for September from Switzerland, Bank of England's Consumer Credit Report for August from U.K., European Commission's Economic Sentiment Report for September from the Euro Area as well as the Unemployment Benefit Claims report for August from France. Markets would also be looking out for monetary policy cues from ECB President Christine Lagarde's speech on Tuesday at the ECB/ESCB Legal Conference.

Major updates to earnings due from the region on Tuesday include Hornbach Holding, 2G energy, AG Barr, Waga Energy, Close Brothers Group, Lumibird, as well as Metals Exploration.