US Stock Futures Fall Amid Iran Tensions and Hawkish Interest Rate Outlook
US stock futures declined on Monday as tensions between the US and Iran escalated, driving up oil prices and fueling inflation anxiety. The losses are expected to set a tone for September, which is typically a weak month for equities.
The shift in interest-rate outlook has turned more hawkish, with traders seeing a nearly 60% chance of a rate hike at the US Federal Reserve's meeting next month, according to the CME FedWatch tool. This represents a sharp increase from 41.4% a week ago, following comments from Fed Chair Kevin Warsh.
Warsh stated that policymakers may need to increase interest rates if inflation doesn't ease to the central bank's 2% target. This has raised the stakes for the upcoming US employment report on September 4, with market participants looking ahead more nervously.
Military strikes between the US and Iran have also disrupted oil shipments in the Middle East, leading to a nearly 6% jump in Brent crude prices. Energy stocks rose accordingly, while most crypto stocks were higher, with bitcoin pinned above $78,000.