European markets begin the session under pressure as escalating tensions between Israel and Iran trigger a wave of risk aversion. The exchange of missile strikes has disrupted regional stability, leading to heightened concerns over energy security and contributing to a rise in global oil prices. This geopolitical uncertainty coincides with shifting economic expectations, particularly around potential U.S. interest rate hikes, which are weighing on investor sentiment.
Traders are also adjusting to recent reversals in the AI sector, where previous gains have been reversed amid profit-taking and renewed scrutiny of valuations. The overnight movements in U.S. and Asian markets highlight growing volatility, setting the stage for a cautious start to trading in Europe. Market participants are closely monitoring developments in the Middle East and central bank signals as they assess the broader implications for asset prices and economic outlook.