Markets price in possible Federal Reserve rate increase
U.S. stock futures pointed to losses at the U.S. open Monday while shares traded lower in Asia. Oil prices surged nearly 3% after U.S. forces struck Iranian rocket launchers near the Strait of Hormuz, according to the Associated Press.
Brent crude, the international standard, rose 2.9% to $90.61 per barrel in early Monday trading. U.S. benchmark crude gained 2.7% to $85.66 per barrel.
The strike was the first American military action in the area in about a month. Oil traders had begun, in the days leading up to the strike, to remove some of the war premium from crude prices as tensions between the United States and Iran eased.
“The Middle East had finally gone quiet enough for oil traders to start sanding some of the war premium out of crude,” Stephen Innes of SPI Asset Management said in a commentary. “Then Sunday arrived, with a reminder that quiet in the Strait of Hormuz is not the same as peace.”
The Trump administration had shifted its focus to economic pressure on Iran days before the strike.
Separately, market expectations that the Federal Reserve may raise interest rates soon added pressure to equity markets.