Anxious markets await Israel’s response to Iran

European shares look set to track Asia’s negative lead after a weekend dominated by news of escalating tensions in the Middle East and fears of a wider regional conflict.

The flight to safety began with talk last week of an Iranian strike on Israel and, after a raid with some 300 drones and missiles, the focus now turns to Israel’s reply.

Gold and the US dollar were firm, though the erstwhile safe-haven yen sank to a three-decade low — a reminder that market participants are still treating the Middle East primarily as a risk, albeit a growing one, while interest rates remain the main theme.

Going some way to keeping that risk capped, US President Joe Biden told Israeli Prime Minister Benjamin Netanyahu the US will not take part in a counter-offensive against Iran.

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