Morning Bid: Nervy markets await Israel's response, Fed outlook

A look at the day ahead in European and global markets from Rae Wee

European shares look set to track Asia's negative lead on Monday 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. [MKTS/GLOB]

Gold and the U.S. 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. [FRX/]

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

Still, the Cboe Volatility Index, or VIX - known as Wall Street's fear gauge - ...