Wall Street braces for oil shock
|As the new trading week gets underway, the stand out story is the attack on Saudi Arabia's oil infrastructure and the fact that the temporary removal of as much as 6% of global output has seen crude prices lurch dramatically higher. Although upbeat oil prices can offer some support for heavyweight energy firms – as is being seen already in European trade - a jump of this size is bad news for consumers and expectations are that the effects will very quickly be seen amongst motorists. With the US economy already risking a slide into recessionary territory, if this spike is sustained then markets could be in for something of a shock. Given the significant impact this news could have on inflation, it also has the potential to steer thinking at the Federal Reserve. If that second rate cut this year looks a little less likely then again, stocks can be expected to come under renewed pressure.
Shortfalls in Chinese economic data released overnight will also be weighing on sentiment, whilst the Empire State Manufacturing Index is the one notable economic release from the US today. Due ahead of the market open, a modest shortfall is being expected but again anything more pessimistic than that has the potential to give yet another reason to consider booking profits. The Fed's announcement on Wednesday will remain front of mind, but the changing geopolitical situation may well lead to further volatility ahead of that key statement.
Ahead of the open, the market is calling the DOW down 102 at 27118 and the S&P down 12 at 2995.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.