EMEA Morning Briefing : Mideast Air Strikes Renew War Fears

MARKET WRAPS

Watch For:

Germany manufacturing orders; no major trading updates expected

Opening Call:

European stock futures were lower, after Asia stocks mostly fell. U.S. Treasury yields rose, the dollar weakened. Gold fell and oil rose.

Equities:

European equity futures were lower, as prospects for peace seemed more distant after Iran fired missiles toward Israel over the weekend, as The Wall Street Journal reported, after an earlier Israeli airstrike on Beirut targeted the Hezbollah militants backed by Tehran.

The latest developments came after the U.S. published a stronger-than-expected jobs report on Friday, which sent investors racing to increase bets that the Federal Reserve will raise interest rates by year-end. The tumble also drew warnings from Wall Street that more turmoil could lie ahead.

Bridgewater Associates founder Ray Dalio called Friday's tumble an "important" move that highlights the central role that the global craze for artificial intelligence and other related stocks has played in the record run. With valuations stretched and yields rising, bonds are now much more attractively priced than stocks, leaving the market in a precarious position, even after Friday's fall, he said.

"Market and economic concentration is in one new sector that is highly volatile and risky-and is super-popular among unsophisticated investors, " he said. "That's classic bubble stuff."

Forex:

The U.S. dollar weakened, as investors digested Fed rate-increase expectations following a stronger-than-expected U.S. nonfarm payrolls report.

"June 5 delivered the sharpest single-day selloff in months across U.S. risk assets, as a blowout May jobs report boosted odds of Fed rate hikes, " said UOB Global Economics & Markets Research.

"Looking ahead to [this] week, markets face a dense event calendar that will test the repriced rate outlook," it said, noting upcoming data such as U.S. CPI and PPI.

Bonds:

U.S. Treasury yields rose after spiking in the earlier session, with the 10-year Treasury hitting a two-week high while the policy-sensitive 2-year Treasury surged to its highest level since February 2025.

"For most of the past two months, markets have displayed an almost supernatural ability to ignore risk," said Stephen Innes, managing partner at SPI Asset Management.

"Yet beneath the surface, something important is beginning to change. The market is gradually moving away from a world where investors debate growth and toward a world where they debate the cost of growth. That distinction may end up defining the second half of the year."

Inflation will likely be front of mind for investors this week, with the consumer-price index reading Wednesday and the producer-price index report coming Thursday.

Energy:

Oil prices rose amid escalating concerns of supply disruption in the Middle East.

Iran fired at least four waves of missiles toward Israel on Sunday in response to an Israeli airstrike on Beirut hours earlier, targeting the Tehran-backed militants Hezbollah.

The attack marked the first time Iran has targeted Israel since its ceasefire with the U.S. went into effect in early April and threatens to keep the Strait of Hormuz, a key waterway through which one-fifth of the world's oil is typically transported, closed.

Metals:

Gold fell as it retreated from the $5,000 a troy ounce level, as Treasury yields climb amid higher inflation risk from elevated energy prices, noted UOB's research team.

Further consolidation in gold prices could be necessary as investors weigh higher opportunity costsfrom the high-yield environment, the team added.

Still, the bank reiterates its long-term positive view on the precious metal, with UOB expecting gold prices to be around $4,600 an ounce in 3Q and $4,800 an ounce in 4Q, before rising to $5,000 an ounce in 1Q next year.

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Aluminum gained, as prices are caught between seasonally weakening demand in China and tight supply conditions elsewhere, said Nanhua Futures.

They expect the current pattern of relative Chinese weakness and overseas strength to continue, adding that the analysts are watching for marginal changes in global inventory levels and the broader market risk appetite.

TODAY'S TOP HEADLINES

Israel Hits Back at Iran after Missile Attack, Renewing Fear of War

TEL AVIV-Israel said Sunday that it had launched airstrikes on Iran in retaliation for waves of missiles fired at its northern regions in a tumultuous day of renewed violence in the Middle East that tested a fragile ceasefire.

Israel followed through on a promise to counterattack after Iran's missile assault, despite warnings to hold off from President Trump, who said a deal to end the war was near with Tehran. Israeli Prime Minister Benjamin Netanyahu was under pressure from his political allies and the opposition to respond to the Iranian missile barrage.

Nvidia Takes the Top Spot in the 2026 List of Best Companies for the Future

Nvidia is No. 1 in The Wall Street Journal's inaugural ranking of Best Companies for the Future, topping a list heavy on tech stalwarts as artificial intelligence reshapes business.

The chip maker is joined in the top five by Alphabet, Microsoft, Meta Platforms and Cisco Systems, a group largely propelled by strong scores for innovation, financial strength and AI readiness-a measure of how prepared a company is for an AI-centric future, as reflected in its operations, its investments and its people.

This Oil Giant Has Capped Prices at the Pump-but Just for the French

PARIS-Most oil companies say price caps at gas stations are a terrible way to address the energy shock sparked by the Iran war. There is one major exception: France's TotalEnergies.

The company, based just outside Paris, has capped prices at its 3,300 gas stations across France and pledged to continue doing so for as long as the conflict in the Middle East endures. It is the only Western oil company to limit fuel prices voluntarily.

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Expected Major Events for Monday

06:00/GER: Apr Manufacturing orders

06:00/GER: Apr Manufacturing turnover

07:00/CZE: Apr External trade

07:00/CZE: Apr Industry, Construction

07:00/SPN: 1Q Housing Price Index

07:00/SWI: May Consumer Sentiment Index

07:00/SVK: Apr Construction production

08:00/ICE: May External trade, preliminary figures

08:00/CZE: May Unemployment data

09:00/GRE: Apr External Trade (provisional data)

10:00/IRL: May Irish Live Register latest monthly figures

23:01/UK: May BRC-KPMG Retail Sales Monitor

All times in GMT. Powered by Onclusive and Dow Jones.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

06-08-26 0017ET