LONDON, Aug 26 - World stock markets turned cautious on Monday as optimism that U.S. interest rates are coming soon was tempered by concern over increased tensions in the Middle East, with oil prices rising over 1.5%.
Both Brent and U.S. crude prices , rose more than $1, or 1.5%, with Brent trading at $80.35 a barrel, in a sign of some unease among investors. "Comparing the Fed to the ECB, the Fed is more focused on the labour market and whether it has tightened too much," said David Kohl, chief economist at Julius Baer in Frankfurt.German business morale, meanwhile, fell for a third consecutive month in August, a survey showed on Monday, pushing back recovery hopes for Europe's largest economy.
The ECB has already started cutting rates, with a 25 bps reduction in July, with a further two quarter point reductions priced in by year-end.In share markets, focus was already turning to the latest earnings from AI-star Nvidia , which reports on Wednesday to sky-high market expectations. That means Nvidia would have to report sales of $30 billion or more and guidance for the third quarter of $33 billion or above, he added.
"We think the adjustment in the dollar reflects the realities now," said Julius Baer's Kohl, referring to the scale of U.S. rate cuts priced in by year-end.
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