Oil Price Surge and Geopolitics Weigh on Stocks Ahead of Inflation Data
Rising oil prices and geopolitical tensions weighed on stocks Monday, as investors await key inflation data from the US. The price of Brent crude futures rose 0.6% to $97 a barrel, its highest in seven weeks, after Iran announced plans for a restricted zone outside the Strait of Hormuz.
The surge in oil prices has led to record highs for diesel fuel, with prices around 90% higher than before the war started. Central banks are now more likely to raise interest rates, making this week's US consumer price reading crucial for investors.
The European Central Bank is expected to lift rates to 2.5% on Thursday, with a 75% chance of another hike to 3.0% by December. The Bank of Japan may also raise rates at its meeting on September 18, with a 60% probability of another move by December.
Analysts warn that the euro may struggle to gain momentum due to rising political tensions in Europe, including the surge of far-right parties such as the Alternative for Germany. This could lead to a shift away from the euro and impact the currency's stability.