3 hrs ago
Middle East Tensions Push Oil Toward $100, Weighing US Stocks
US stock markets looked set to open lower on Tuesday.
Fighting and tension in the Middle East pushed oil prices close to $100 per barrel.
More expensive oil can make inflation worse because fuel and transportation cost more.
Investors are therefore worried that the Federal Reserve may keep interest rates higher for longer.
A recent jobs report was stronger than expected, which also reduced hopes for a rate cut.
Brent crude reached $99.50 after attacks affected facilities in southern Saudi Arabia.
Iran said an agreement with Oman about shipping through the Strait of Hormuz was close, but it also warned that ships could be at risk.
Some companies gained or lost sharply because of their own business news.
US stock futures fell, with S&P 500 futures down 0.4% and Dow futures down 0.7%.
Brent crude reached $99.50 a barrel after attacks halted operations at facilities in southern Saudi Arabia.
A stronger-than-expected August jobs report reduced expectations for a Federal Reserve rate cut.
Traders were pricing in about a 60% chance of a quarter-point cut at the September 15–16 meeting.
Roivant Sciences rose 24% pre-market, while Novartis fell 12% after contrasting drug-trial results.
- Who
- US investors, the Federal Reserve, Saudi Arabia, Iran, Oman, and companies including Roivant Sciences and Novartis.
- What
- US stock futures declined as Middle East tensions lifted oil prices and increased inflation concerns.
- Where
- US financial markets and the Middle East, including Saudi Arabia, Iran, Oman, and the Strait of Hormuz.
- When
- Tuesday, 8 September; key US inflation data were due Friday, 11 September, ahead of the Federal Reserve meeting on 15–16 September.
- Why
- Attacks and shipping concerns raised oil prices, while strong employment data reduced expectations for near-term Federal Reserve rate cuts.
Key facts
- S&P 500 futures
- Set to open 0.4% lower.
- Dow futures
- Down 0.7% in early trading.
- Brent crude
- Reached $99.50 a barrel.
- US crude
- Rose 2.5% to $93.79 a barrel.
- August payrolls
- Rose by 162,000, compared with forecasts for a 56,000 increase.
- Unemployment rate
- Held at 4.1%.
- Federal Reserve rate-cut odds
- Markets priced in about a 60% chance of a quarter-point cut at the September meeting.
Sources
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