Oil Prices Near $100 as Fed Rate-Hike Bets Rise
US markets are set for a cautious start to the trading week after the Labor Day break, as investors weigh escalating US-Iran tensions and a sharp rise in crude oil prices. The price of Brent crude has climbed to around $99 a barrel, while US West Texas Intermediate crude rose above $94.
The surge in oil prices is raising concerns about global energy supplies and inflation. Treasury yields are also elevated, with the benchmark 10-year yield near multi-year highs. Higher yields can weigh on equities by increasing borrowing costs and making bonds more attractive compared to stocks.
Investors are closely watching inflation data this week, including August PPI and CPI releases. The latest available data showed US consumer prices rose 3.4% year-on-year in July, while core CPI increased 2.5%. Markets are also focused on the Federal Reserve's September 15-16 meeting, with a 60% chance of a 25-basis-point interest rate hike priced in by traders.
US stock futures point to a cautious opening after the Labor Day break, with investors returning to markets against a backdrop of geopolitical uncertainty and elevated oil prices. Tech stocks could remain in focus, particularly AI and semiconductor companies, which have seen recent gains.