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Oil prices are pushing a little higher – Brent crude is now up almost 1% at $74.90 per barrel.
European stock markets have begun the new week with modest gains, despite the attacks between Iran and Israel continuing.
Investors are exercising caution following a weekend marked by mutual attacks between Israel and Iran. However, a complete sell-off has not materialized. The market currently anticipates a limited conflict, though there is little indication that hostilities will end quickly. It is expected that fighting will continue unabated this week, albeit on a limited scale.
Investors should not harbor hopes for a quick resolution to the situation in the coming days. Uncertainty in the market typically leads to increased volatility because planning becomes more challenging. The risk of an escalation beyond localized retaliatory actions remains; this includes the possibility of Iran targeting energy facilities, which could result in a sharp rise in oil prices. If oil prices surge past $100 per barrel again, Germany could face the threat of recession once more.
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