Danske Research Team expects equity markets to open more than 1% lower, tracking Asian losses after US‑Iran talks failed and Brent crude gapped higher. The bank notes a likely catch-down in European indices after Friday’s relative outperformance, even though risk appetite had remained visible last week with cyclicals and semiconductors outperforming defensives.

Futures point to weaker open

"Brent crude gap opens above US 100 per barrel on Monday morning after the US and Iran failed to reach an agreement over the weekend."

"Equity futures are pointing to an opening south of -1% today, mirroring the sell-off across Asia as the first round of negotiations between the US and Iran over the weekend failed."

"However, US markets were lower already on Friday, with the S&P 500 closing down -0.1% and HY credits -0.4%, despite solid inflation figures. In contrast, Stoxx 600 closed up 0.4% and OMX Nordic surged 1.3%, so we should expect a catch-down effect amplifying negative reaction in our markets today."

"Interestingly, the tech sector was one of the best-performing sectors in the US on Friday, despite software continuing to sell off. Semis could more than compensate for this weakness, however, which is interesting - and in line with our views..."

"Materials and real estate also fared well, while it was defensive sectors like health care and staples selling off. Hence, risk appetite was fully visible throughout last week despite the negative closing."

"Consequently, equities and equity futures are in red and the USD a bit stronger."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)