The S&P 500 Index futures rose on Monday as market participants reacted to the latest reporting that the US and Iran were in talks and considering a 50-day ceasefire. They rose by 25 points to $6,600. Similarly, those tracking the Dow Jones and Nasdaq 100 rose by 25 and 115 points, respectively. Here are the top catalysts for the blue-chip SP500 Index this week.
S&P 500 Index to react to US-Iran conflict
The most important catalyst for the S&P 500 Index is the ongoing US-Iran conflict, which has entered its sixth week.
Traders are reacting to an Axios report that said that the US and Iran were holding talks and considering a 45-day ceasefire. The ceasefire would have Iran open the Strait of Hormuz as the war ends. This explains why crude oil prices have moved sideways today.
Still, analysts believe that Iran will not agree to a ceasefire as it has an upper hand and is making more money today than it did before the war started.
At the time, Iran was selling about 1 million barrels of oil a day for less than $60. Today, it is selling over 1.5 million barrels for over $100 and is also making money by charging tolls at the Strait of Hormuz.
Iran also believes that the ceasefire will give the US and Israel time to acquire more military equipment and relaunch the war. As such, officials want a real end to the war instead of a mere ceasefire.
The S&P 500 Index will also react to Trump’s statement on bombing Iranian critical infrastructure, including power plants and bridges. Such a move will escalate the ongoing war and lead to higher crude oil prices and lower stock market.
US consumer inflation data
The other main catalyst for the S&P 500 Index this week will be the upcoming US consumer inflation report, which will come out on Friday.
This report will provide an official impact of Trump’s war on US inflation. Economists polled by Reuters expect the upcoming report to show that the headline Consumer Price Index (CPI) rose from 2.4% in February to 3.4% in March this year.
Core inflation, which excludes the volatile food and energy prices, is expected to show that it moved from 2.5% to 2.7%.
Inflation will likely continue rising in the coming months, especially if the war continues. For example, jet fuel priceshave more than doubled in the past few weeks.
Also, data shows that gasoline prices have jumped to $4, while fertilizer and other items have continued soaring.
A higher inflation report will mean that the Federal Reserve will not be in a hurry to cut interest rates this year. Besides, a report released on Friday showed that the labor market improved, with the unemployment rate falling to 4.3% as the economy created over 176k jobs.
The US will also release more macro data this week. For example, the ISM will release the latest non-manufacturing PMI report on Monday, while the Bureau of Economic Analysis will release the latest GDP report on Thursday.
Key companies to publish reports ahead of the earnings season
The S&P 500 Index will also react to some key corporate results, which will come out ahead of the start of the first quarter earnings season.
Delta Air Lines,the biggest American airline, will be the first company to publish its earnings on Wednesday. These results will provide more information about the impact of the war on its business now that jet fuel prices have soared.
The other companies to release their earnings on Wednesday are Constellation Brands and RPM International. Progressive, a major insurance company, will release on Thursday. The real earnings season will start next week, with companies like JPMorgan, Goldman Sachs, Johnson & Johnson, and BlackRock releasing their numbers.
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