The Ongoing Oil Rally Fuels New Inflation Fears

The US equities ended Tuesday with a notable decline amid rising geopolitical tensions in the Middle East and the upcoming release of key US inflation data. By the end of the session, the Dow Jones (US30) fell 1.18%, the S&P 500 (US500) dropped 0.58%, and the Nasdaq (US100) closed 0.12% lower. The main pressure on valuations came from concerns over eroding corporate margins due to surging energy prices and the prospect of further Federal Reserve tightening. Microsoft shares fell 1.1%, Palantir declined 2.3%, and Amazon slipped 0.6%, while simultaneously shifting part of its foreign‑currency borrowing (including GBP) due to oversaturation in the dollar‑denominated debt market driven by the AI sector. Despite the negative backdrop, some stocks showed resilience: Oracle gained 2.4% ahead of its quarterly earnings release, which is expected to clarify real demand for cloud infrastructure and enterprise AI solutions.

Canadian 10‑year government bond yields jumped to 3.80%, reaching their highest levels in more than two years. Pressure on sovereign debt intensified due to declining attractiveness of Canadian assets as a safe haven and accelerating import prices. The central bank keeps its key rate at 2.25%, but Governor Tiff Macklem’s rhetoric has turned noticeably more hawkish. Amid inflationary shocks from trade tensions and rising energy costs, the Bank of Canada (BoC) signaled readiness to resume rate hikes if inflation remains elevated.

In Europe, Tuesday’s session ended mixed: Germany’s DAX (DE40) closed flat, France’s CAC 40 (FR40) rose 0.14%, Spain’s IBEX 35 (ES35) slipped 0.12%, and the UK’s FTSE 100 (UK100) fell 0.09%. European markets finished in the red overall, reacting to intensifying macroeconomic and geopolitical pressure. The ongoing oil rally and natural gas prices holding near three‑year highs (amid the Middle East crisis) are fueling fresh inflation fears. Markets have almost fully priced in a 25 bps rate hike from the European Central Bank at this week’s meeting.

Escalation of conflict around key Middle Eastern transport arteries and energy infrastructure continues to exert powerful pressure on commodity markets, keeping prices at multi‑week highs. Fighting near Kharg Island – the main terminal through which roughly 90% of Iran’s oil exports pass – and around the port city of Jask poses a direct risk of physical supply disruption. Tanker destruction and strikes on logistics facilities are pushing the conflict into a phase of severe depletion of Iran’s export capacity.

In Asia, Japan’s Nikkei 225 (JP225) fell 1.70%, China’s FTSE China 50 declined 0.62%, Hong Kong’s Hang Seng (HK50) dropped 0.38%, and Australia’s ASX 200 (AU200) closed 1.00% lower.

China’s annual Consumer Inflation (CPI) accelerated to 0.8% in August (from 0.5% in July), matching market expectations. Producer Price Inflation (PPI) rose to 3.8% y/y from 3.5% previously, exceeding analyst expectations. The acceleration in price pressures is mainly driven by rising energy costs amid ongoing geopolitical turmoil and supply disruptions from the Middle East, feeding into domestic commodity and production costs. On Wednesday, the offshore yuan traded near 6.70 per dollar.

In Australia, speeches by Deputy Governor Andrew Hauser and Assistant Governor Sarah Hunter set a hawkish tone, confirming that the central bank is considering a fourth rate hike this year amid persistent inflation. The probability of a rate increase at the 29 September meeting is now estimated at roughly 74% (versus less than 10% a month ago), while a November hike is fully priced in. Against this backdrop, the Australian dollar (AUD) is holding firmly near 0.72 USD, marking its highest levels in four months.

The New Zealand dollar (NZD) traded around 0.585 USD after two consecutive sessions of moderate declines, as markets reassessed the Reserve Bank of New Zealand’s rate outlook. The probability of a pause at the October meeting is estimated at roughly 80%, while a December hike remains fully priced in.

• S&P 500 (US500) 7,673.52 -45.08 (-0.58%)

• Dow Jones (US30) 52,786.07 -628.18 (-1.18%)

• DAX (DE40) 26,006.53 +1.10 (+0.01%)

• FTSE 100 (UK100) 10,811.66 -10.47 (-0.10%)

• USD Index 98.87 -0.31 (-0.31%)

News feed for: 2026.09.09

• China Consumer Price Index (m/m) at 04:30 (GMT+3) – CHA50, HK50 (HIGH)

• China Producer Price Index (m/m) at 04:30 (GMT+3) – CHA50, HK50 (MED)

• Mexico Inflation Rate (m/m) at 15:00 (GMT+3) – MXN (MED)