Investors' biggest concern at the moment is a further rise in the oil price and the unforeseeable risks this poses for the global economy. The hope that strategic oil reserves will be released could act as a calming pill for the markets, at least in the short term.
However, investors are likely to be distracted from the developments in the Iran conflict by the publication of important US economic data, such as the inflation data in the middle of the week.
Military escalation continues: Geopolitical risks dampen risk appetite
Due to the military escalation in the Iran war, the price of oil (WTI) has risen above the psychologically important 100-dollar mark for the first time since the start of the war in Ukraine. Donald Trump had defended rising energy prices as a necessary price for security and peace.
The Strait of Hormuz is currently considered almost impassable. As a rule, around 20 percent of global oil trade is transported through the strait between the Persian Gulf and the Gulf of Oman every day.
One week after the outbreak of the war, Israel bombed an oil depot in Tehran for the first time, putting additional pressure on the oil price. Basically, an end to the military conflict between the warring parties does not appear to be in sight at present. The US President recently called for Iran's unconditional surrender. He ruled out an agreement with Tehran to end the war.
Focus on US inflation data in the middle of the week
Investors will focus on US inflation data on Wednesday (13:30). In addition to consumer prices (including the drivers energy and food), the focus will also be on the core rate of inflation, which excludes the aforementioned drivers and not least acts as the Fed's preferred inflation measure.
Economists expect the US consumer price rate to rise by 2.4% compared to the same month last year, following 2.4% in January. A status quo is also expected for the core rate (2.5%).
Focus on numerous US economic data on Friday - US monetary policy likely to take a back seat for the time being
On Friday, investors can expect a whole host of different economic data at 13:30. The second estimates of GDP growth for the US, the core rate of personal consumption expenditure and new orders for durable goods are expected.
The trading week is rounded off by the so-called „JOLTs“ (Jop Openings and Labor Turnover Survey) and preliminary data on Michigan consumer sentiment.
In view of the dynamic developments in the Iran war, US monetary policy is likely to play only a minor role at present. The US Federal Reserve (Fed) is due to meet for the second time this year on March 18 to decide on the key interest rate level. According to the CME Group's „Fed Watch Tool“, only 3.6% of market participants currently expect a rate cut of a quarter of a percentage point and 96.4% expect a pause in interest rates.
Dow Jones Industrial Average Index
West Texas Intermediate (WTI)
