Oil’s move back above $100/bbl is bringing markets closer to levels that historically trigger broader risk-off sentiment. However, investors are not yet pricing in a prolonged oil shock similar to 2022, when prices remained above $100 for several months. The current futures curve still reflects expectations that the spike will be temporary. In addition, the inflation backdrop is less concerning than in 2022, when inflation was already well above target before oil surged, reducing fears of an aggressive central bank response for now.
Geopolitical tensions remain the main driver of sentiment, with rhetoric from both the US and Iran suggesting the potential for a prolonged conflict and continued strikes, which is keeping oil prices elevated and markets cautious.
Meanwhile, the latest US February CPI data had limited impact on markets. The report came largely in line with expectations, with headline CPI rising +0.3% month-on-month (2.4% year-on-year) and core CPI +0.2% month-on-month (2.5% year-on-year), but investors viewed the data as backward-looking given the potential inflationary impact of the Middle East conflict.
Conclusion for S&P 500:
For now, equities remain relatively resilient because markets still assume the oil spike will be temporary. However, if oil stays above $100 for longer and conflict risks escalate, the probability of a broader risk-off move in the S&P 500 would increase, as investors begin pricing in a more persistent energy shock and potential inflation pressures.
Key Support and Resistance Levels
Resistance Level 1: 6850
Resistance Level 2: 6895
Resistance Level 3: 6936
Support Level 1: 6698
Support Level 2: 6659
Support Level 3: 6636
This communication is for informational purposes only and should not be viewed as any form of recommendation as to a particular course of action or as investment advice. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. Opinions, estimates and assumptions expressed herein are made as of the date of this communication and are subject to change without notice. This communication has been prepared based upon information, including market prices, data and other information, believed to be reliable; however, Trade Nation does not warrant its completeness or accuracy. All market prices and market data contained in or attached to this communication are indicative and subject to change without notice.
Geopolitical tensions remain the main driver of sentiment, with rhetoric from both the US and Iran suggesting the potential for a prolonged conflict and continued strikes, which is keeping oil prices elevated and markets cautious.
Meanwhile, the latest US February CPI data had limited impact on markets. The report came largely in line with expectations, with headline CPI rising +0.3% month-on-month (2.4% year-on-year) and core CPI +0.2% month-on-month (2.5% year-on-year), but investors viewed the data as backward-looking given the potential inflationary impact of the Middle East conflict.
Conclusion for S&P 500:
For now, equities remain relatively resilient because markets still assume the oil spike will be temporary. However, if oil stays above $100 for longer and conflict risks escalate, the probability of a broader risk-off move in the S&P 500 would increase, as investors begin pricing in a more persistent energy shock and potential inflation pressures.
Key Support and Resistance Levels
Resistance Level 1: 6850
Resistance Level 2: 6895
Resistance Level 3: 6936
Support Level 1: 6698
Support Level 2: 6659
Support Level 3: 6636
This communication is for informational purposes only and should not be viewed as any form of recommendation as to a particular course of action or as investment advice. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. Opinions, estimates and assumptions expressed herein are made as of the date of this communication and are subject to change without notice. This communication has been prepared based upon information, including market prices, data and other information, believed to be reliable; however, Trade Nation does not warrant its completeness or accuracy. All market prices and market data contained in or attached to this communication are indicative and subject to change without notice.
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Wyłączenie odpowiedzialności
Informacje i publikacje nie stanowią i nie powinny być traktowane jako porady finansowe, inwestycyjne, tradingowe ani jakiekolwiek inne rekomendacje dostarczane lub zatwierdzone przez TradingView. Więcej informacji znajduje się w Warunkach użytkowania.