The US stock market is likely to open flat on Friday, March 13, as investors continue to monitor tensions in the Middle East while also awaiting key inflation data that could provide cues on the monetary policy outlook of the US Federal Reserve.
Futures of the three key averages — the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite — were trading largely flat, up around 0.10%, in pre-market trade. In the previous session, all three indices shed over 1.5% in a broad sell-off, with most sectors suffering deep losses, barring defence and energy stocks.
The higher energy prices triggered by the war have put the S&P 500 on track for a third straight week of losses.
Crude oil prices continue to march higher
The conflict in the Middle East has entered its 14th day, with Iran intensifying attacks on Dubai and energy infrastructure across the Gulf region, keeping crude oil prices elevated, while Israel launches a new set of strikes on Tehran.
The price of Brent crude oil, the international standard, remained over $100 per barrel, with prices earlier this week rising to $120 per barrel.
Meanwhile, Donald Trump threatened major new retaliation.
“Watch what happens to these deranged scumbags today,” Trump wrote in a social media post. “Iran’s Navy is gone, their Air Force is no longer, missiles, drones and everything else are being decimated, and their leaders have been wiped from the face of the earth.”
On the other hand, Mojtaba Khamenei, Supreme Leader of Iran, vowed to keep the strategic Strait of Hormuz shut, also warned neighbouring countries to shut down US military bases on their territory or risk becoming targets, intensifying fears of a broader regional escalation.
The International Energy Agency warned that the war with Iran could create the largest-ever oil supply disruption, fueling fears of rising inflation pressures.
The Trump administration has reportedly asked US oil companies and shipping firms to prepare for a possible waiver of the century-old Jones Act, which governs domestic shipping, in an effort to mitigate rising fuel prices, according to Reuters.
Earlier this week, Chris Wright, the US Energy Secretary, said the country would release 172 million barrels of oil from its Strategic Petroleum Reserve to offset supply shortages, but that did little to prevent crude oil prices from rising.
Last week, Trump said the US would escort commercial oil tankers through the Strait of Hormuz, but Wright noted that the US Navy is not yet fully prepared, though he did not rule out the possibility, saying such operations could begin by the month’s end.
Economic data in focus
A slew of economic indicators is expected to be released today, including consumer sentiment, durable goods orders, job openings, labor turnover data, and the broad-based personal consumption expenditures (PCE) report, the Fed’s preferred inflation gauge.
The latest labour market data showed that initial jobless claims in the US fell by 1,000 from the previous week to 213,000 in the first week of March, slightly below expectations of 215,000, and remain well below the averages seen over the past two years.
The US Federal Reserve is scheduled to meet on March 18, where policymakers are widely expected to keep interest rates unchanged, with traders currently pricing in only one 25-basis-point rate cut, possibly in September.
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