Fed Rate Increase Concerns Weigh on US Markets as Energy Prices Climb

With a potential US Fed interest rate increase looming on Wednesday and concerns surrounding the AI sector increasing, stock markets are mixed globally and retreating in the US to start the new trading week.

Energy prices are climbing once again following the shutdown of Saudi Arabia’s east-west pipeline after last week’s attacks, keeping inflation pressures building. Treasury yields are also rising heading into the Fed meeting, boosting the US Dollar and putting other currencies and Precious Metals under pressure.

Canada consumer prices (3.0% v. Street 3.0%) were in line with expectations.

NASDAQ futures are down 1.6%, while Dow futures are down 0.3%.

In Asia, the Nikkei fell 0.8%, while the Hang Seng gained 0.4%. In Europe, the DAX is down 0.6%, while the FTSE is up 0.5%.

In Commodities, Crude Oil is up 3.0%, trading above $100.00/bbl, while Brent Crude has gained 3.4% to trade above $105.00/bbl. Gasoline is up 3.8%, trading above $3.40/gallon. Gold has fallen 1.7% to trade near $4,325/oz, Copper is down 1.9% near $6.40/lb, and Silver has declined 2.6%.

In Rates, the US 10-year Treasury Note yield is approaching 5.00%, while the US 30-year Treasury Note yield remains above 5.35%. In currency markets, the USD Index is up 0.5%, while the Euro has fallen 0.5% and the Loonie is down 0.3%.

Looking ahead, China retail sales and industrial production data are due overnight tonight. The Fed is widely expected to announce a 0.25% increase in the Fed Funds rate to 4.00% on Wednesday afternoon.

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