US Stocks Weaken, Energy Surge Pressures Risk Appetite
US stocks weakened on Monday (March 2nd), retesting this year's lows, as the escalating war in the Middle East pushed up energy prices and triggered a global shift from riskier assets to defensive instruments. In early trading, the S&P 500 fell around 0.8% and the Nasdaq fell as investors reacted to a combination of geopolitical risks and pressure on energy costs.
Risk-off pressures intensified after the US attack on Iran—which included the country's top leader—followed by Iranian retaliatory attacks on several targets in the region. This situation increased the risk of a prolonged conflict, while markets assessed potential disruptions to trade/energy routes could prolong the period of global volatility.
The energy surge reignited inflation concerns: higher oil prices could potentially raise logistics and production costs, potentially leading to a return to normal inflation expectations. If price pressures persist, markets are starting to factor in less room for interest rate cuts—and even the possibility of tighter monetary policy from major central banks, including the Federal Reserve.
Stock declines were fairly widespread. Tech giants like Amazon and Apple experienced corrections, while the banking sector also came under pressure—with cautious sentiment regarding credit quality and risks in the non-bank financing market (private credit). Meanwhile, shares of North American energy producers rose sharply, in line with the oil rally that boosted the energy sector's earnings outlook. (alg)
Source: Newsmaker.id
