European Shares May See Tepid Start As Geopolitical Tensions Rise

European stocks may see a tepid start on Wednesday as geopolitical tensions rattle financial markets.

Investors got jittery as a Russian strike on Poland raised fears the nine-month Ukraine war could escalate.

The White House said it could not confirm the reports and was working with the Polish government to gather more information.

Ukrainian President Volodymr Zelenskyy decried the strike as a very significant escalation of the war.

Russia denied the allegations and dismissed the reports as “a deliberate provocation aimed at escalating the situation”.

Asian markets fell broadly, but the downside remained capped after a meeting between the presidents of the world’s two largest economies ended with a positive outcome.

The U.S. dollar rose on safe-haven demand and gold steadied near a three-month high, while oil prices fell as China reported 19,609 cases for Tuesday, the highest since late April when financial hub Shanghai was in the midst of a two-month lockdown.

Trading later in the day may be impacted by reaction to a speech from ECB’s Lagarde and U.S. reports on retail sales and industrial production.

U.S. stocks ended higher overnight, as Fed Vice Chair Lael Brainard’s comments and weak producer price inflation data added to hopes of smaller Fed rate rises.

Walmart’s strong results also brought some cheer, but stocks pulled back well off their best levels of the day following reports that Russian missiles had landed in NATO-member Poland, killing two people.

The tech-heavy Nasdaq Composite climbed 1.5 percent to a nearly two-month closing high, the S&P 500 gained 0.9 percent and the Dow 0.2 percent.

European stocks rose for the fourth day on Tuesday amid signs of easing U.S.-China tensions.

The pan European STOXX 600 rose 0.4 percent. The German DAX and France’s CAC 40 index both added around half a percent while the U.K.’s FTSE 100 slipped 0.2 percent.

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