Risk-Off Sentiment Builds Amid Hawkish Central Banks and Crude Oil Concerns

Risk-off sentiment is building across markets due to concerns over higher crude oil prices and hawkish monetary policies from major central banks.

The Federal Reserve and Bank of Japan are expected to raise interest rates by 25 basis points, which may have a greater influence on market direction than the rate decisions themselves.

The US, Iran geopolitical situation and crude oil prices will also remain important factors in shaping the market outlook.

AI-related risks are becoming more concrete, with Anthropic reporting that AI-assisted workflows have been used in cyber operations. Growing calls for stronger AI oversight could weigh on AI-related equities and the Nasdaq through increased regulatory, valuation, and concentration risks.