European markets brace for a tumultuous start on Friday as escalating tensions in the Middle East send shockwaves through global markets. Israeli Prime Minister Benjamin Netanyahu’s ominous declaration, “whoever harms us or plans to harm us,” has heightened fears of a broader conflict, casting a shadow over financial markets.
Netanyahu’s statement follows Monday’s presumed Israeli airstrike on Iran’s embassy, raising concerns of potential retaliation. The uncertainty has dampened the recent bullish sentiment on Wall Street, triggering a late fall and painting Asian shares red while causing oil prices to surge.
The EURO STOXX 50 index futures have already plunged more than 1.5%, indicating significant turmoil ahead for European markets. Similarly, Britain’s FTSE futures have dropped more than 1.4%, reflecting widespread investor anxiety.
The resurgence of the Israel-Hamas conflict, previously overshadowed by optimism over global rate cuts, now looms large as a wildcard for central bankers. Minneapolis Fed President Neel Kashkari even suggests that rate cuts may be unnecessary if inflation continues to stagnate, further complicating market expectations.
With Brent futures surpassing $90 a barrel, the case for easing monetary policy weakens, adding to market uncertainty. All eyes are now on the forthcoming U.S. jobs report, which could determine the timing of a potential Federal Reserve rate cut.
The market rollercoaster intensifies as recent economic data confounds expectations. While surprise growth in U.S. manufacturing initially boosted the dollar, subsequent reports of a sluggish services sector reignited speculation about Fed intervention.
Anticipation mounts ahead of Friday’s data release, with forecasts suggesting an increase of 200,000 jobs in March. However, the pace of labor market improvement in the world’s largest economy remains uncertain, leaving investors on edge.
Key market influencers on Friday include Eurozone retail sales, Germany’s import prices, and UK government debt auctions, alongside the eagerly awaited U.S. nonfarm payroll report for March.
