US-Iran Conflict Tests Middle East Stability
US and Iran have exchanged new strikes, putting the fragile ceasefire to the test and forcing investors to reassess their economic forecasts. The exchange has caused significant uncertainty in the global market.
### Oil Prices Rise Amid Global Market Uncertainty
Crude prices rose 0.5-1.2% after the US and Iran exchanged new strikes, despite a ceasefire in place. Global stock markets were sluggish as investors reassessed their economic forecasts. Brent crude was up 0.5% at $94.77 a barrel, and primary US benchmark West Texas Intermediate stood up 1.2% at $89.70 a barrel. Wall Street initially started sluggishly, but more than two hours into trading, the Dow had just begun to rise, up 0.1% at 50,680.29 points.
### US Federal Reserve's Preferred Inflation Measure Rose in April
The personal consumption expenditures (PCE) index jumped 3.8% from a year ago, the Commerce Department said, matching expectations and higher than 3.5 percent in March. This persistent inflation combined with slowing growth reduces the chances of interest rate cuts by the Federal Reserve.
### Asian Markets See Losses as US-Iran Conflict Continues
Asian markets saw losses, with the main benchmarks in Hong Kong, Taipei, and Sydney closing down more than 1%. Shanghai's main exchange was an exception, adding just 0.1% to the market.
### Investors Reassess Economic Forecasts Amid Conflict
The US also revised down its first-quarter GDP growth to 1.6% from 2.0%, as investment and consumer spending slowed. The ongoing conflict between the US and Iran has caused investors to reevaluate their economic forecasts.
### Hawkish Federal Reserve Posturing Amid Inflation
Bret Kenwell, US investment analyst at eToro, stated that even after stripping out energy prices, core PCE is sitting at a multi-year high. The concern now is whether higher energy prices will begin to filter into non-energy categories, making inflation more challenging for both consumers and the Fed to address.