(CercleFinance.com) - The Paris stock market is expected to open virtually unchanged on Friday in a climate still dominated by risk aversion as the Israeli-Iranian conflict continues to reignite geopolitical tensions in the region.

At around 8:15 a.m., the CAC 40 index futures contract for June delivery was down 3.5 points at 7,675 points, signaling a continuation of Friday's decline (-1%) and last week's (-1.5%).

Friday's announcement of Israeli military strikes against several military and strategic sites in Iran triggered a sharp move in the markets toward assets considered the safest, such as the yen, gold, and bonds.

As the conflict enters its fourth day, investors will continue to closely monitor the latest news from the Middle East, with Israel stepping up its strikes against Tehran over the weekend.

The unexpected return of geopolitical risk could prompt investors to continue favoring safe-haven assets.

"We are not taking any of this lightly and hope that an escalation can be avoided," commented Citi strategists.

"We will monitor the potential repercussions on global economic conditions, which will be an important signal," added the US bank.

"From there, the impact on fundamentals can be assessed," adds Citi, which says it currently views the renewed tensions as a mere "episode of volatility."

These concerns come on top of lingering fears surrounding the global trade situation, which could fuel further bouts of volatility.

On the oil market, crude prices are moderating their gains on Monday. Brent crude, which had reached a high of over $78 on Friday, is now up just 0.8% at $73.6 this morning.

"For energy markets, the key question going forward is whether the recent escalation will disrupt energy supply or demand," Danske Bank said.

Analysts at the Scandinavian bank point out that the Israeli strikes have so far spared Iran's oil facilities.

'If future attacks damage Iranian oil production sites, prices could react more sharply,' warns the Nordic bank.

'The worst-case scenario, however, would be if Iran closed the Strait of Hormuz to traffic. Such an attack would severely disrupt oil exports from the Gulf, but the consequences would be even greater for global LNG trade," Danske continues.

"We believe the risk of such an extreme measure is low, but it cannot be completely ruled out," the bank concludes.

The Tokyo Stock Exchange recovered 1.4% at the end of trading on Monday, while the CSI index, which tracks the 300 leading stocks in Shanghai and Shenzhen, fell 0.1%.

Futures on New York indices currently suggest that Wall Street will open higher, with the Dow Jones expected to rise 0.2% and the Nasdaq to gain 0.3%.

Wall Street, which ended a two-week winning streak last week as the crisis in the Middle East intensified, will be closed on Thursday for Juneteenth.

Amid the turmoil triggered by saber rattling in the Middle East, markets may nevertheless find some reasons for hope in the major economic events expected this week.

In the US, Wednesday's Fed meeting is not expected to result in any change in interest rates, but could provide an update on growth and inflation, which could accelerate the long-awaited monetary easing.

Also on the agenda for the coming days are important data on US consumption, with retail sales figures due tomorrow.

In Europe, consumer price figures for the eurozone, due on Wednesday, will provide an insight into the recent slowdown in inflation observed in recent months on the Old Continent.

Copyright (c) 2025 CercleFinance.com. All rights reserved.