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U.S. inflation figures, the European Central Bank’s interest-rate decision and developments in the Iran conflict are among the main events for markets this week, alongside earnings reports from Oracle (NYSE:ORCL) and Adobe (NASDAQ:ADBE).
The U.S. trading week will be shortened by Monday’s holiday. Investors will then turn to economic data and central bank policy, with August consumer price figures due ahead of the Federal Reserve’s interest-rate decision next week.
1. U.S. inflation data
August U.S. consumer price data are due on Friday and will provide investors with further information on inflation ahead of the Federal Reserve’s September policy meeting.
Headline consumer prices are expected to have increased 3.4% year-on-year in August, matching July’s rate. On a monthly basis, inflation is forecast to accelerate to 0.4% from 0.1%.
Core CPI, which excludes food and fuel, is expected at 2.4% year-on-year and 0.2% month-on-month. The corresponding July readings were 2.5% and 0.2%.
The inflation report follows August employment data showing that the U.S. economy added 162,000 jobs. The figures have increased market expectations for a Federal Reserve rate rise as policymakers continue to focus on inflation.
2. ECB interest-rate decision
The European Central Bank will announce its latest interest-rate decision on Thursday, with markets pricing in a 25-basis-point increase.
The decision comes as policymakers assess the effect of higher energy prices associated with the Middle East conflict. European natural gas prices have risen to their highest levels since 2023.
ING analysts described the potential move as an “insurance hike,” intended to “strengthen its credibility and to preempt any possible indirect or even second-round effects from the current energy price shock.”
The Federal Reserve’s next rate decision is scheduled for the following week.
3. Iran conflict and Strait of Hormuz
Developments involving Iran and the Strait of Hormuz will remain another focus for markets as the six-month conflict continues.
Vital Knowledge analysts said the U.S. appeared either “incapable” or “unwilling” to conclude the fighting, while Tehran was “digging its heels.”
The analysts also said Washington appeared to be “winning the war of Hormuz.”
Reuters reported that a U.S. naval blockade of Iranian ports and tighter sanctions were restricting Tehran’s oil exports and access to foreign currency, citing Iranian insiders and regional sources.
Whether those measures result in renewed negotiations remains uncertain. Vital Knowledge said the pressure could ultimately amount to a “Pyrrhic victory as Tehran’s economic desperation prompts it to escalate the conflict even further.”
