Investors were rattled on Monday by worries of escalating tensions in the Middle East, resulting in the Dow swinging 600 points before closing about 250 points lower. Concerns over Israel’s potential response to Iran’s weekend attack, the possibility of war between Russia and Ukraine, and the ongoing trade battles between China and the United States have heightened anxiety among investors. These worries come at a time when markets are already on edge due to persistent inflation. JPMorgan Chase CEO Jamie Dimon expressed that geopolitics are the biggest threat to the future of the free world, particularly highlighting the impact on the global economy if oil and gas prices rise too high.
This week, investors will closely monitor Fed speak and the International Monetary Fund meeting taking place in Washington, DC. The IMF will release its latest World Economic Outlook, including global economic forecasts. US Federal Reserve Chair Jerome Powell will engage in a fireside chat, along with various other Fed officials and central bank governors from around the world. Oil and gold prices are expected to be impacted by uncertainty caused by escalating tensions, with potential for oil prices to rise significantly if conflicts in the Middle East intensify.
Chips stocks and US-China tensions are also in focus, with chipmakers like Nvidia and AMD experiencing volatility in their share prices due to growing tensions between the two countries. Export controls limiting the shipment of chips and technology to China have negatively impacted US companies and suppliers, leading to significant declines in market capitalization and revenue. Boeing is also under scrutiny for safety and quality concerns, with a whistleblower hearing scheduled in the Senate to address allegations of shortcuts taken during the manufacturing of its 777 and 787 Dreamliner jets. The company’s reputation has suffered in recent years following fatal crashes of the 737 Max model.
On a positive note, spending at US retailers rose in March for the second consecutive month, indicating the strength of the US consumer driven by a robust job market. Retail sales increased by 0.7% in March, surpassing economists’ projections. Promotional activity from e-commerce brands like Amazon helped drive up online sales, highlighting strong consumer spending to close out the first quarter of 2024. Overall, despite geopolitical tensions and market volatility, the retail sector continues to show resilience and consumer confidence.
