Next Week Outlook: Middle East Conflict Influences US Stocks, Major US CPI Data to Be Released Next Week

1. In the coming week, investors will closely monitor the extent of the Middle East conflict's escalation and its impact on energy supplies, while also digesting the latest US inflation data. The US and Israel's military actions against Iran have entered the sixth day, oil prices have surged, and various asset prices have experienced sharp fluctuations. The S&P 500 index fell 0.7% for the week, and the Cboe Volatility Index climbed to its highest level since November.2. One of the market focuses is the surge in energy prices triggered by the conflict. Brent crude has surpassed $85 per barrel, a significant increase from the pre-war level of $70. Analysts point out that a break above $100 would be a psychological threshold, "potentially triggering greater market panic." Rising oil prices could weaken consumer spending by pushing up gasoline prices, thereby dampening the outlook for the stock market.3. The US February CPI data, to be released on Wednesday, is highly anticipated. Surveys expect the February CPI to rise by 0.2% month-on-month. Investors say that if the data is mild (since the statistical period is almost entirely before the conflict), the market may downplay its impact; but a surprise spike in inflation would pose problems. The January CPI data was already below expectations.4. Concerns about energy-driven inflation have prompted investors to delay expectations for rate cuts. The market now sees only a 32% probability that the Federal Reserve will cut rates by at least 25 basis points in June, down significantly from 47% a week ago and 75% a month ago. If energy prices continue to rise and stoke inflation concerns, the Fed's expected two rate cuts this year will face greater resistance.5. Analysts point out that the situation in the Middle East is highly uncertain, and investors are caught in a "stalemate of neither selling nor buying." Although the stock market is only 2% below its historical high and optimism still supports expectations for economic fundamentals and earnings growth, the conflict and inflation data will be key variables in the coming week.