Middle East Tensions, Inflation Fears Send Markets Sliding
Global markets took a hit on Tuesday as investors grew increasingly concerned about inflation and ongoing conflict in the Middle East. The major US indices all dipped, with the S&P 500 down 1.18%, the Dow Jones dropping 0.58%, and the Nasdaq slipping 0.32%. Meanwhile, oil prices surged after Iran-backed Houthis in Yemen attacked Saudi energy facilities, pushing WTI crude up 2.13% to $99.07 a barrel and Brent crude jumping 2.82% to $94.05 a barrel.
The resurgence of inflation has been a major concern for investors in recent weeks, with bond yields reaching multi-year highs and putting pressure on central banks to raise interest rates. The European Central Bank is set to increase euro zone rates by a quarter point this week, while the chances of the Bank of Japan doing the same next week are intensifying.
The Federal Reserve will issue a new statement on September 16, which could prove decisive in setting expectations for the outcome of its upcoming meeting. Currently, money markets show traders attaching a roughly 58% chance of a rate rise.