European Futures Plunge, Markets Enter Stagflation Mode
European stock index futures fell on Monday morning as concerns mounted about escalating conflict in the Middle East, including threats to energy and civilian infrastructure. Euro Stoxx 50 futures were down around 1.8% as of 7:53 a.m. Paris time, while futures on other major indices, such as Germany's DAX and London's FTSE, also fell sharply.
Market participants believe the surge in energy risks is intensifying the stagflation scenario—a combination of weakening growth and rising inflation. ING's chief investment strategist, Vincent Juvyns, said the market is now moving into "full-blown stagflation mode," reflecting concerns that the energy shock will limit room for policy easing and weigh on growth prospects.
Rhetoric heated up over the weekend after US President Donald Trump issued a 48-hour ultimatum to Tehran to reopen the Strait of Hormuz—a crucial passageway for oil and gas flows—or the US would "destroy" Iran's power plants. Pictet's senior adviser, Christopher Dembik, believes that recent developments actually point to a worsening situation, thus deeming market optimism premature.
Source: Newsmaker.id