Markets Shudder Under Hawkish Rate Hikes and Crude Oil Pressure
The global markets are experiencing a risk-off sentiment due to concerns over higher crude oil prices, a more hawkish Federal Reserve and Bank of Japan outlook, and growing AI security risks.
The Federal Reserve and Bank of Japan are expected to raise interest rates by 25 basis points this week, with market-implied probabilities above 80%.
Developments surrounding the US-Iran geopolitical situation and crude oil prices will remain important, while AI-related risks are becoming more concrete.
The Nasdaq is facing several fundamental headwinds, including elevated US bond yields near their yearly highs, Anthropic-related AI security concerns, expectations of Fed and BOJ rate hikes, and crude oil prices weighing on the inflation and growth outlook.