US futures have dropped on Thursday after another volatile trading session on Wall Street as oil prices continue to rise, stoking fears of inflation, and amidst continued uncertainty over the future timeline of the ongoing war in West Asia.
Futures linked to the Dow Jones are down nearly 450 points, while those linked to the S&P 500 are also down 50 points. Nasdaq futures are also trading with losses of nearly 200 points.
After a brief cool-off, oil prices are back on the upswing with both Brent and US crude prices surging over 7% each this morning. While Brent is back near the mark of $100 per barrel, WTI is back above the mark of $93 a barrel.
Inflation figures released on Wednesday evening were in-line with the expectations at 2.4%. Core CPI also stood at 2.5%, meeting expectations. However, the figures are backdated and the ongoing war in West Asia has resulted in rising fears of price increases again due to the disruption in supply chain.
“Beyond energy, another risk receiving less attention is the potential knock-on effect on food prices, as fertilizer shortages push agricultural costs higher,” said Wolfe Research chief economist Stephanie Roth in a note written on Tuesday.
Roth believes that the disruption could raise the food-at-home inflation by 2 percentage points, adding 0.15% to the headline inflation figure in the US, along with a 0.4% increase from energy prices.
On Wednesday, the Dow Jones ended with losses of 300 points, while the S&P 500 and Nasdaq recovered from the lows of the day to end at the flat line.
The US Dollar index has also resumed strengthening against other currencies, currently trading around the mark of 99.5. Gold and Silver prices are volatile, without any clear direction, holding on to earlier levels above $5,100 and $85 an ounce respectively.
In addition to rising oil prices, the Trump administration has also launched a Section 301 probe on India and 15 other countries to replace the reciprocal tariff regime, which was deemed illegal by the US Supreme Court last month.