Preview: Europe Set to Open Weak on Geopolitical Worries

European equity markets look set to start the week slightly down as concerns over Iran’s nuclear strategy could bump up the price of oil; earnings remain in the spotlight.

“We are waiting to see if there is any escalation in the geopolitical threat from Iran which is starting to affect the price of oil,” said David Buik, Marketing Director at Cantor Index. If the perception of Iran’s actions grow more negative then the predicted flat to weak equity performance could trend significantly down.

Oil ended last week above $61 a barrel on U.S. inventory data which showed supply to be down on expectations.

Earnings from U.S. retail companies and U.K. banks will also be in focus said Buik, as both are key indicators of economic strength. The U.S. will get a signal on the robustness of the U.S. consumer Tuesday 27th as February’s consumer confidence data is released.

Some of the companies reporting fourth-quarter results are: Standard Chartered, Federated Department Stores, Gas Natural, Iberia, Turkcell, Deutsche Telekom and Merck.

The yen looks set to stay at lower levels against the euro and dollar as carry trade investors can continue with little fear of a Bank of Japan rate raise in the near term. The BOJ will release its minutes on Monday 26th which will give investors further clarity about future hikes.

The markets will also be eyeing an annual report from DaimlerChrysler, to get further direction on the company’s troubled U.S. arm Chrysler.