Next Week's Five Major Market Focus Areas

Investing.com - As a new week begins, there are few signs of easing in the Iran conflict, with oil prices soaring above $100 per barrel, raising concerns about a surge in global inflation pressures. The Federal Reserve is about to enter a quiet period, during which a series of latest inflation and employment data will be released. Oracle Financial Software and Adobe will be the focus of this week’s earnings season, while fears of AI disruption are spreading across the tech industry.

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1. Iran conflict may trigger a oil shock

As in recent times, the joint US and Israel strikes on Iran are likely to remain the dominant market topic this week.

Over the weekend, both sides conducted airstrikes on critical infrastructure, further dashing hopes that the conflict, already diminished, would end relatively quickly.

These concerns intensified when Mojtaba Khamenei was appointed as Iran’s next Supreme Leader. Even before the announcement, President Donald Trump warned that choosing the son of the former leader Ayatollah Ali Khamenei—who was killed in the initial US and Israel bombings on February 28—was “unacceptable.”

For financial markets, most attention is focused on how the violence impacts oil prices. Brent crude surged above $100 per barrel on Monday, reflecting fears that the conflict could lead to a long-term disruption of vital oil supplies through the Strait of Hormuz, a narrow waterway in southern Iran.

Although reports indicate that major oil producers like Saudi Arabia have proposed to increase market supply, helping to ease earlier oil price spikes, policymakers are openly worried that the conflict could trigger a resurgence of inflation pressures. Particularly in the US, the persistent high prices and stagnant growth—an ominous “stagflation” scenario—are becoming more concerning.

2. US inflation data to be released soon

Against this backdrop, two key US inflation indicators will be released this week.

The first, scheduled for Wednesday, will measure consumer price increases for February. Economists expect the Consumer Price Index (CPI) to accelerate slightly to 2.5% over the 12 months ending February, up from 2.4% in January. On a monthly basis, it is expected to rise modestly from 0.2% to 0.3%.

Excluding volatile food and energy prices, the so-called “core” CPI is expected to be 2.5% year-over-year and 0.2% month-over-month.

Then on Friday, the core Personal Consumption Expenditures (PCE) Price Index for January will be released. Analysts forecast an annualized growth rate of 3.1% and a monthly increase of 0.4%. This indicator is especially watched because it is widely considered one of the Federal Reserve’s preferred inflation measures.

Additionally, the January Job Openings and Labor Turnover Survey (JOLTS) will also be released on Friday.

Laurence Bo, Global Market Director at CMC Markets, said: “A data-heavy week could test market confidence in stocks, forex, and indices.”

3. Federal Reserve enters quiet period

Federal Reserve policymakers face a dilemma: a weakening labor market and the potential for prices to rise again. On one hand, rate cuts could help stimulate employment but would push inflation higher; on the other, rate hikes could contain prices but might hinder hiring.

Given this dilemma, investors seem to be betting that the Fed will hold interest rates steady at least through the upcoming policy meeting next week. The Fed will enter a quiet period before the decision on March 18.

After that meeting, due to uncertainty about the trajectory of employment and inflation, the future path looks quite uncertain.

Bond yields have risen, and the dollar has strengthened as traders reduce bets on an earlier rate cut later this year.

4. Oracle Financial Software to release earnings

On the earnings front, Oracle Financial Software will be a key focus this week.

Once seen as a small player in the cloud market, its position has rapidly expanded due to a partnership with OpenAI, giving it an advantageous position in providing computing power for AI models.

However, investors are increasingly skeptical about Oracle Financial Software’s plans to build large-scale data centers to serve clients like OpenAI and Meta Platforms, the parent company of Facebook. In December, the company announced that it now expects capital expenditures for the current fiscal year to reach $50 billion, up from an earlier estimate of $35 billion.

According to Bloomberg, Oracle Financial Software is considering layoffs of thousands of employees. Bloomberg also reports that due to prolonged negotiations over financing, Oracle Financial Software and OpenAI have abandoned plans to expand a large AI data center in Texas.

Oracle Financial Software’s stock soared to about $328 in September, but before trading opened Monday in the US, it was at $152.96. The stock has fallen more than 20% so far this year.

5. Adobe earnings upcoming

Also scheduled for release is Adobe’s earnings, the developer of design software products like Photoshop and Acrobat.

While many of its products are essential tools in the creative industry, Adobe has not been immune to the impact of AI-enhanced competitors.

In response, Adobe has pushed its own AI strategy, racing to incorporate this emerging technology into its suite of services through its Firefly tools.

This effort appears to position the company well, with executives forecasting full-year revenue and profit for fiscal 2026 to surpass Wall Street expectations.

However, Adobe has not avoided the broader sell-off in software stocks this year, driven by investor concerns over industry-wide disruption from AI startups like Anthropic, the maker of Claude. Adobe’s stock has fallen more than 14% so far this year.

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