A cautious start to European markets on the last day of the month

On the first day of the new week and the last day of the month, we expect a cautious start to European markets after news emerged on Friday that the US could curb cash flows to China. The Asian session assimilated better data from China, but also a shift in sentiment that led to mixed presentation.

Early indications of major European futures point to a weaker opening, with minimal changes. The formal trade talks are scheduled for October 10 and 11, but if the rhetoric continues, it will not be at all surprising if the talks break down. We are entering a critical month for trade warfare and not only October is one of the worst in terms of seasonality.

Today, we also have some events on the calendar for Europe and the Eurozone that we will expect to have their impact, but the markets we think will have their main focus on trade war and the Trump impeachment. At this stage, I do not have a high risk-off, as gold starts trading with decreases and the yen and franc are with minimal appreciation. The US dollar is trying to pick up speed amid uncertainty.

Oil started rising slightly after a statement by Saudi Arabia that it considered Iran's attack as a call for war, but prices returned with minimal change after the rhetoric eased. There is also an OPEC meeting today, and we will expect more clarity on the situation in the Arab country and the production of OPEC and OPEC +.

Given that it is the last day of the month, we expect more dynamic cash flow than standard volatility as market participants close positions or reposition themselves.

Read more:

• Risk off after the escalation in the Middle East, markets are recovering in a period of calm
• The macroeconomic events for today’s trading calendar
• The US government has confirmed the attacks, Trump is calling an emergency staff meeting
• Has the war between Iran and the US started?
• US markets remain under pressure, traders await Iran’s response