U.S. E-mini S&P 500 futures experienced a notable decline of over 1.5%, erasing the week's gains amid heightened tensions following Israel's attack on Iran. This situation raises significant concerns about surging energy prices that could exacerbate inflation and keep interest rates elevated for longer. Analysts highlight potential disruptions in global shipping and oil infrastructure, especially through the strategic Strait of Hormuz, posing risks to the U.S. economy. The Federal Reserve may also find it more challenging to navigate policy amidst these developments, as markets anticipate substantial rate cuts by year-end.
"Israel's large-scale strikes on Iranian facilities and senior leadership risk triggering a significant Iranian response that could target economic interests across the region..."
"Such scenarios could push crude prices sharply higher, possibly exceeding $100 or even $130 per barrel, according to JPMorgan estimates."
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