European Stock Futures Lower; Ukraine Tensions Weigh

European Stock Futures

European stock markets are expected to open lower, continuing last week’s selloff, as the threat of war in Ukraine adds to concerns surrounding high inflation and the prospect of U.S. Federal Reserve interest rate hikes.

At 2:10 AM ET (0710 GMT), the DAX futures contract in Germany traded 0.5% lower, CAC 40 futures in France dropped 2.2% and the FTSE 100 futures contract in the U.K. fell 0.1%.

European stocks closed lower Friday, pulled down by Wall Street, on fears that surging U.S. inflation will prompt the Federal Reserve to tighten monetary policy aggressively, starting with a 50 basis point hike in March, which were compounded by a slump in the Michigan Consumer Sentiment index.

San Francisco Fed President Mary Daly tried to play down market expectations of a half-point move in an interview on Sunday, saying being too “abrupt and aggressive” on policy could be counter-productive.

However, these comments largely fell on deaf ears with investors turning their attention to concerns that Russia could invade Ukraine in the near future with U.S. National Security Advisor Jake Sullivan telling CNN on Sunday there’s “a distinct possibility that there will be major military action very soon.” The U.S. and several other western countries have advised their nationals to leave the country.

German Chancellor Olaf Scholz is set to continue the diplomatic onslaught by visiting Ukraine later in the day, followed by a trip to Moscow the day after, as the standoff heads into its most tense week.

These raised tensions helped oil prices climb Monday to their highest levels in more than seven years, heading towards $100 a barrel. Many fear that an invasion of Ukraine would lead to sanctions on Russia’s financial system, making it impossible for western companies to pay for Russian crude exports and forcing them to chase supplies elsewhere on the global market.

Russia is one of the world’s top crude producers, and such a disruption to global supply would occur just as the Organization of the Petroleum Exporting Countries and its allies, including Russia, struggles to ramp up output to cope with recovering demand.

The FTSE MIB climbed down by 0.82% to 26,966.20. In the cash markets, the DAX  Germany was trading down by 0.42%  to 15,425.65. CAC 40  in France  Fell by 1.27% to 7,011.37 while the FTSE 100  in the U.K. was down by 0.15% to 7,66.35, at the time of writing.

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