Global equities are experiencing pressure from rising oil prices, which have climbed due to increased hostilities between the US and Iran. Brent crude reached its highest level in six weeks, nearing $97 a barrel, after Washington and Tehran engaged in their largest exchange of tanker attacks to date. These escalating tensions have renewed concerns about crude supply disruptions and potential inflation, impacting bond yields across Europe and Asia. The Stoxx 600 fell 0.2%, with economically sensitive sectors seeing the biggest declines.
Despite the broader market cautiousness, technology stocks are showing some resilience, particularly in Asia. South Korean memory heavyweights like SK Hynix Co. and Samsung Electronics Co. were notable gainers, driven by renewed optimism surrounding artificial intelligence following the release of OpenAI’s GPT-6 model. Nasdaq 100 contracts also rose 0.3%, while S&P 500 futures were little changed. Cash trading in US Treasuries and stocks was closed for the Labor Day holiday.
Traders are keenly anticipating a busy week of economic events, culminating in Friday's US inflation print. This data will be crucial in determining whether the Federal Reserve raises or holds interest rates in its upcoming meeting. Ahead of this, the European Central Bank is widely expected to hike rates to counter energy-driven inflation. The market is also looking at Treasury auctions, as bond yields are currently near multi-year highs, with the 10-year Treasury yield little changed at 4.78%. Analysts suggest that the risk of a hawkish Fed could be reflected in equities, keeping bond markets nervy.
