Main US indexes advance; All up >1%
Euro STOXX 600 index up ~0.8%
Dollar down; crude falls ~5%; gold dips slightly; bitcoin rallies >2%
US 10-Year Treasury yield falls to ~4.22%
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WELLS FARGO FLAGS ENERGY SHOCKS COULD PRESSURE RETAIL DEMAND
Rising oil prices triggered by supply disruptions and geopolitical tensions are highly likely to dent consumer demand, adding pressure to a 2026 spending backdrop that is already strained, Wells Fargo says.
The war in the Middle East is creating the biggest oil supply disruption in history, the International Energy Agency said last week, as major oil producers such as Saudi Arabia, Iraq and the UAE cut production.
"Our analysis suggests that there is a quantifiable negative impact of approximately 200 to 300bps to sales and consumer expenditures on discretionary categories post-oil shock events, which impacts lower-end consumers the most, and can meaningfully get worse the longer it persists," Wells Fargo analysts led by Ike Boruchow said, citing historical patterns.
When focusing in on periods of “shock” - gasoline has a -75% relationship to retail sales and 90% relationship to consumer confidence, they added.
Wells Fargo estimates that every 10% increase in the price of gasoline has an average impact across all households of $265 per year, representing a 85 bps headwind to the discretionary wallet, more heavily burdened on lower-income households.
The brokerage also flags near-term cuts to sales estimates across the retail space, warning that elevated fuel prices tend to prompt analysts to trim revenue forecasts and that the pressure is most acute for companies with higher exposure to lower-income shoppers.
(Joel Jose)
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US STOCKS CLIMB WITH MIDDLE EAST, FED IN FOCUS CLICK HERE
SPRING EQUINOX, 200-DMA IN FOCUS AS S&P 500 SELLOFF EXTENDS CLICK HERE
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ONE BARREL AFTER ANOTHER CLICK HERE
EUROPEAN EQUITIES MOSTLY LOWER, ENERGY STOCKS GAIN CLICK HERE
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