President Trump says oil companies should continue using Strait of Hormuz
President Trump has encouraged oil companies to use the Strait of Hormuz, as it is a key battleground in the escalating conflict with Iran.
March 12 (Reuters) – U.S. stock index futures fell on Thursday as oil prices rose to around $100 a barrel, raising inflation concerns and causing traders to dial back hopes for a U.S. interest rate cut.
Oil prices soared after reports that two tankers were set ablaze in Iraqi waters after an apparent attack by Iran as part of a broader attack on oil and shipping facilities across the Middle East. Iran has warned that oil prices could soar to $200 per barrel.
S&P 500 airline stocks .SPLRCALI, which is sensitive to oil prices, is expected to suffer its biggest monthly loss in a year.
In premarket trading Thursday, American Airlines AAL.O and Southwest LUV.N each fell more than 1%, while cruise stocks Norwegian NCLH.N and Royal Caribbean RCL.N also fell.
Energy companies Occidental OXY.N and EQT Corporation EQT.N rose slightly.
Goldman Sachs has postponed its forecast for the Federal Reserve’s next interest rate cut from June to September. Traders are now fully pricing in just one quarter-point cut through December, according to money market futures, down from the two cuts expected before the dispute.
“The problem is that investors are increasingly pricing in disputes to be protracted and cause significant economic damage,” said a group of strategists led by Jim Reid at Deutsche Bank.
“Ultimately, with no concrete signs of easing tensions yet, oil prices remain high, increasing the risk of a broader stagflation shock.”
Global markets have been reeling this month as the U.S. and Israel’s war with Iran disrupted oil supplies, sending oil prices soaring and complicating the world’s central banks’ monetary easing plans.
As of 4:49 a.m. ET, the Dow E-mini YMcv1 was down 262 points, or 0.55%, and the S&P 500 E-mini EScv1 was down 29.75 points, or 0.44%. The Nasdaq 100E Mini NQcv1 fell 109.75 points (0.44%).
The CBOE Volatility Index .VIX, Wall Street’s fear gauge, rose 1.01 points to 25.24, while futures tracking the interest rate-sensitive Russell small-cap index RTYcv1 fell more than 1%.
Additionally, Washington announced in a lengthy cable it would launch two new trade investigations into overcapacity and forced labor in 16 of its major trading partners in an effort to rebuild tariff pressure after the Supreme Court struck down most of President Donald Trump’s tariff plans last month.
Investors are taking a hard look at the roughly $2 trillion private credit market after a series of credit problems that have surfaced in recent months, raising concerns about loan performance and borrowers’ ability to cope with rising interest rates.
Glendon Capital Management said private credit lenders such as Blue Owl OWL.N were obscuring weaknesses in its portfolio, the Financial Times reported.
Morgan Stanley on Wednesday restricted redemptions in one of its private credit funds, and JPMorgan Chase & Co. reduced the size of some loans to its private credit funds.
Blackstone BX.N shares fell 0.6%, while Blue Owl OWL.N fell 0.8%.
Bumble Inc BMBL.O soared 24% on Thursday after the dating app operator reported better-than-expected fourth-quarter revenue.
Ahead of Friday’s consumer spending report, the central bank’s preferred measure of inflation, investors will look at jobless claims and comments from Federal Reserve Vice Chair Michelle Bowman later in the day.
(Reporting by Medha Singh and Johan M. Cherian in Bangalore; Editing by Shelly Jacob Phillips and Maju Samuel)
