US-Iran Tensions Fuel Inflation Fears, Interest Rate Hike Pressure
The escalating tensions between the US and Iran are set to impact the Nasdaq Composite and S&P 500 indices, with energy prices soaring due to the conflict. Brent and West Texas Intermediate (WTI) benchmarks rose to $90 and $85, respectively, while gasoline prices remain above $4 a gallon, and diesel prices have jumped to multi-year highs.
This increase in energy costs will likely feed into inflation, keeping rate-hike pressure alive. The Federal Reserve may hike interest rates in December if inflation remains elevated, as hinted by Kevin Warsh at the Jackson Hole Symposium.
The upcoming US macro data, particularly the nonfarm payrolls report on Friday, will also be crucial for the indices. Economists expect over 84k jobs to be added in August, which could raise the possibility of a Fed rate hike.