European shares dip at open as oil and rate fears persist

European indexes started the session in negative territory:

• Eurostoxx -0.2%
• Germany DAX -0.2%
• France CAC 40 -0.3%
• UK FTSE -0.1%
• Spain IBEX -0.4%
• Italy FTSE MIB -0.4%

What is driving equities lower this morning?

From a macroeconomic standpoint, oil prices and geopolitical tensions continue to act as the primary drag. Brent crude is moving toward $98.70, and WTI crude is climbing back above $94 on the day as US-Iran tensions persist.

Higher energy costs are further stoking inflation worries, with markets looking ahead to the ECB's decision on Thursday, where a 25-basis-point rate increase is broadly anticipated.

Rising bond yields are another important factor, with German 10-year yields holding near 3.38%, a level not seen since 2011.

Across the Atlantic, US futures are indicating a cautious tone, with S&P 500 futures declining 0.2% and Dow futures dropping 0.6%. Tech stocks are faring slightly better, as Nasdaq futures edge up 0.1%.

US markets resume trading today after the long weekend, building on Friday's robust payrolls data, which strengthened the view that the Fed might raise rates again this month.

For now, there is no widespread panic selling in European markets. But a mix of elevated oil prices, rising yields, tightening risks from the ECB and Fed, and ongoing Middle East tensions is keeping investors cautious.