European markets are anticipated to start Thursday with a subdued sentiment as investors assess the risks associated with the Middle East tensions and await significant U.S. economic data for insights into the Federal Reserve's potential rate changes.
There is a growing concern among investors about the likelihood of an expanded conflict in the Middle East. Israel's war cabinet is reportedly deliberating its response after Iran initiated its largest-ever offensive against the country, escalating hostilities. Earlier today, several airstrikes were reported in Beirut, with explosions audible throughout the Lebanese capital. Authorities confirmed at least six fatalities. In light of the escalating situation, numerous countries have issued travel advisories and undertaken the evacuation of their citizens.
In terms of economic indicators, trading might be influenced later in the day by the market's reaction to recent U.S. employment figures, service sector performance, and factory order data. Particularly, PMI data from Germany and the eurozone's services sector could shape expectations regarding potential rate cuts by the European Central Bank.
The U.S. Labor Department is poised to unveil its more scrutinized employment report for September on Friday. Current expectations among economists suggest an increase of 140,000 jobs for September, following the 142,000 rise in August, with the unemployment rate anticipated to remain steady at 4.2 percent.
In Asian markets, stocks exhibited mixed performances. Hong Kong's Hang Seng Index dropped nearly 3 percent due to profit-taking after recent robust gains. Meanwhile, Japan's Nikkei advanced over 2 percent, bolstered by a weaker yen, following the new prime minister's comments that subdued speculation around another interest rate hike. The U.S. dollar reached its highest level in over six weeks against the yen, following PM Shigeru Ishiba's dovish views.
In the commodities and financial markets, U.S. Treasuries experienced a decline, while gold saw a slight increase as investors awaited the Federal Reserve's forthcoming decisions. Oil prices increased by over 1 percent in Asian trading, driven by concerns over potential supply interruptions in West Asia.
In the U.S., stock markets concluded with slight gains overnight, as heightened geopolitical tensions in the Middle East offset more robust-than-expected private sector job growth data from payroll processor ADP for September. The Dow, Nasdaq Composite, and S&P 500 all closed with a marginal upward inclination.
European markets ended Wednesday's trading session with mixed results amid caution regarding the potential for a larger conflict in the Middle East. The pan-European STOXX 600 finished flat but with a slight positive tendency. Germany's DAX fell by 0.3 percent, whereas France's CAC 40 saw a modest rise, and the U.K.'s FTSE 100 increased by 0.2 percent.
