European Markets Drop as Oil Above $100 Fuels Inflation Concerns

European markets are bracing for moderate losses on Tuesday, with Euro Stoxx 50 futures falling 0.7%, after a mixed session on Monday and Wall Street's S&P 500 reaching new all-time highs. The focus is sharply on the upcoming U.S. Consumer Price Index for April, expected to show headline inflation rising to 3.7% from 3.3% the previous month, driven largely by higher gasoline prices amid the escalating conflict between the United States and Iran and the closure of the Strait of Hormuz. A high-level meeting between Donald Trump and Xi Jinping is scheduled for Thursday, adding to geopolitical tensions weighing on investor sentiment. In Asia, trading was mixed with South Korea's Kospi index experiencing a dramatic reversal, surging past 8,000 points before plummeting more than 3% on comments from an official suggesting citizens should receive dividends from AI-generated profits. Meanwhile, investor enthusiasm has cooled as prospects for a U.S.-Iran agreement fade, keeping oil prices firmly above $100 per barrel. The Ibex 35 in Madrid has struggled to maintain the 18,000-point level after three consecutive declines, with technical analysts identifying 17,308 points as a critical support level. Company earnings to watch this session include ACS, CIE Automotive, Siemens, Vocento, Bayer, Thyssenkrupp, and Vodafone. Market participants will also monitor U.S. inflation data closely to assess how much energy price increases have filtered into broader consumer costs. The consensus forecasts core inflation to rise one-tenth of a percentage point to 2.7%. German April CPI and the May ZEW sentiment index are also due. In currency markets, the euro traded at $1.1754, while Brent crude rose to $104.91 per barrel and West Texas crude climbed to $99. Bitcoin advanced to $81,216, and the yield on 10-year U.S. Treasury bonds ticked up to 4.423%.