Escalating Middle East hostilities are roiling global markets. After Iran launched strikes on energy facilities in the Persian Gulf, Brent crude jumped back to $103 per barrel. US gasoline prices exceeded $5 per gallon for the first time since 2022, reigniting energy inflation fears. Former President Trump had previously leveraged lower energy costs to stabilize consumer prices, but the latest spike threatens to delay any rate cuts—potentially until 2027, according to some projections.
S&P 500 Futures Slip; Fund Managers Shift to Cash
Optimism from the prior session faded quickly, with S&P 500 futures dropping 0.2%. A Bank of America survey reveals fund managers are hoarding cash as the conflict deepens, signaling growing caution. Should hostilities persist, broad risk-off selling could accelerate.
Nvidia edged up 0.3% in choppy trading, reiterating its goal to generate at least $1 trillion in revenue from its flagship AI chips by 2027. Expectations of record AI-driven earnings have provided a floor for both tech stocks and risk assets like Bitcoin. Monday's rally in US markets lifted most European and Asian indexes; Europe's Stoxx 600 is on track for consecutive gains since the outbreak of current hostilities.
IDF Launches Large-Scale Assault; Iran's New Supreme Leader Rejects Peace
At press time, Israeli Defense Forces have launched a large-scale assault on Iran. Retaliatory strikes on strategic sites are expected within hours. Iran's Foreign Minister denied ongoing communications with the US, stating the last contact with American envoy Witkoff occurred before the recent attacks.
Over the past hours, Iran released several updates regarding Mojtaba Khamenei, its new Supreme Leader. During a foreign policy meeting, the Supreme Leader rejected any proposals to de-escalate tensions with the US or pursue peace, dismissing recommendations sent via two intermediary countries. He stated, "This is not the right time for peace," emphasizing that both the US and Israel must face defeat and pay reparations.
Quiet Data Day Ahead of Fed Decision
While this week promises intense macroeconomic developments, today is relatively quiet in terms of data releases. No major reports are scheduled. All eyes are on tomorrow's Federal Reserve interest rate decision and follow-up announcements. The central bank is widely expected to hold rates steady, but any hint on the rate-cutting timeline could trigger sharp moves.
Bitcoin continues to hold above the $70,000 level amid tightening liquidity and heightened geopolitical uncertainty. If oil prices remain elevated, risk assets could face renewed selling pressure.