By Peter Nurse
Investing.com - European stock markets are expected to open in a cautious manner Monday, as investors keep a wary eye on developments in the war between Ukraine and Russia with peace talks set to take place in Turkey this week.
At 2 AM ET (0700 GMT), the DAX futures contract in Germany traded 0.4% lower, CAC 40 futures in France dropped 0.4% and the FTSE 100 futures contract in the U.K. fell 0.3%.
The war in Ukraine is now entering its second month and has resulted in the devastation of several cities, caused a major humanitarian crisis, and displaced an estimated 10 million people, nearly a quarter of Ukraine's population.
That said, Russia has failed to seize any major Ukrainian city and risks being drawn into guerrilla warfare, something Moscow would be keen to avoid, given previous difficulties in Afghanistan.
New in-person peace talks between Russia and Ukraine are set to take place in Turkey this week. Ukrainian President Volodymyr Zelensky said in a video address to his country on Sunday that his government would prioritize the "territorial integrity" of Ukraine, but hopes are rising that a compromise over the status of the eastern Donbas region could be reached as part of a peace deal.
Meanwhile, the U.S. quickly backtracked from President Joe Biden’s comments that Vladimir Putin “cannot remain in power,” with Secretary of State Antony Blinken clarifying that his country does not have a strategy for regime change.
The economic data slate is largely empty in Europe Monday, with most attention on the monthly U.S. employment report due at the end of the week as this could help markets get a sense of whether the Fed’s roadmap for rate hikes is realistic.
Back in Europe, the Financial Times reported on Sunday that the chief executive of Daimler Truck (OTC:DDAIF) said electric truck costs would "forever be higher" than those using combustion engines, putting the EV market into the spotlight.
Oil prices slumped Monday on fears of reduced demand from China, the world’s largest crude importer, as a surge in COVID-19 cases prompted the country’s officials to instigate a two-stage lockdown at its financial hub of Shanghai.
All firms and factories in Shanghai would suspend manufacturing or have people work remotely in a two-stage lockdown, closing half the city in turns, over nine days. Public transport, including ride-hailing services, will also be suspended.
By 2 AM ET, U.S. crude futures traded 3.6% lower at $109.80 a barrel, while the Brent contract fell 3.3% to $113.52.
Oil is still heading for a fourth monthly gain after Russia, the world's second-largest crude exporter, invaded Ukraine, prompting fears of disruptions to global supplies, driving prices above $100 a barrel.
Additionally, gold futures fell 1% to $1,934.45/oz, while EUR/USD traded 0.3% lower at 1.0951.