By Bas Kooijman, CEO and Asset Manager of DHF Capital S.A
U.S. equity futures edged lower on Thursday, approaching multi-month lows after a decline in the previous session. Rising inflation concerns, hawkish monetary policy signals, and escalating geopolitical tensions weighed on risk assets. Energy markets are adding to the pressure. Oil prices surged following renewed attacks on energy infrastructure in the Middle East, intensifying concerns about inflationary pressure.
The Federal Reserve reinforced the cautious backdrop, while Chair Jerome Powell emphasized the uncertainty created by the ongoing conflict in the Middle East. At the same time, stronger-than-expected producer price data and upward revisions to inflation expectations have further reduced the likelihood of near-term monetary easing. Markets are increasingly pricing a prolonged period of unchanged monetary policy, pushing Treasury yields higher and driving equities down.
At the corporate level, Micron delivered strong earnings and guidance, yet its shares declined, highlighting the market’s risk aversion and concerns over AI spending and valuations. However, developments in the AI space could remain supportive, with Nvidia pointing to a trillion-dollar revenue opportunity, while others continue to commit aggressively to AI infrastructure.
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