Global markets diverged as further US rate-hike expectations drove Treasury yields higher and pressured Wall Street. Europe was mixed as strong economic activity reinforced tightening concerns, while Asia-Pacific split ahead of the Trump–Xi summit, with South Korean technology and solar stocks outperforming despite weakness in China and Hong Kong.
Rate fears rattle Wall Street
US stocks fell as expectations for further Federal Reserve tightening pushed Treasury yields higher. The DOW dropped -0.6%, while the S&P 500 fell -0.7%, and the NASDAQ lost -1.1%. Fed Governor Michael Barr said further rate hikes would be needed to curb inflation. Alphabet fell -3.4%, while McDonald’s dropped -5.0% to its lowest since 2022 after warning elevated inflation and weak restaurant traffic could persist. IonQ gained +4.8% after successfully testing a real-time quantum error decoder. Royal Caribbean (-2.9%) agreed to buy 50% of Sandals Resorts for around US$3 billion, expanding its Caribbean presence. Meanwhile, 30-year mortgage rates climbed to 7.12%, their highest since 2024. President Trump said US officials held ‘very good’ talks with Iranian envoys, reviving hopes for diplomacy after earlier threatening to ‘annihilate’ Iran if a deal could not be reached. Attention also turns to President Xi’s visit to Washington, with trade, AI, rare earths, and Iran expected to feature in talks with Trump. In rates markets, the US two-year Treasury yield gained +12bp to 4.897%, its highest since May 2024, while the 10-year yield jumped +15bp to 5.114%, its highest since July 2007, after hotter PMI readings reinforced expectations for further Fed tightening.
Hot data splits European market
European markets were mixed as stronger activity reinforced expectations for further ECB tightening. The STOXX 600 slipped -0.4%, while the UK’s FTSE 100 remained flat, Germany’s DAX gained +0.7%, and France’s CAC 40 fell -0.4%. Eurozone private-sector activity expanded at its fastest pace in three years, with stronger-than-expected manufacturing and services activity adding to rate concerns. Prosus dropped -4.8%, while British sportswear retailer JD Sports Fashion fell -5.7%. Meanwhile, Portuguese-British AI drone maker Tekever reached a US$6.4 billion valuation after raising US$580 million, amid rising European defence spending.
Trade caution splits Asia-Pacific
Asia-Pacific markets were mixed as South Korean technology stocks advanced, while investors remained cautious ahead of the Trump–Xi summit. South Korea’s KOSPI gained +0.9%, with SK Square (+5.0%) and Samsung Electronics (+3.3%) higher as AI-related stocks strengthened, although Doosan Enerbility fell -5.6%. Solar companies Hanwha Solutions (+6.4%) and OCI Holdings (+9.6%) also surged as expectations that US restrictions on Chinese solar products would remain supported domestic competitors. China’s Shanghai Composite fell -0.4% ahead of the Trump–Xi meeting, while Hong Kong’s Hang Seng lost -1.0%, with Alibaba (-4.4%) among decliners. Australia’s ASX 200 edged +0.1%, with Northern Star gaining +4.0%. New Zealand’s NZX 50 fell -0.4%, with KMD Brands dropping -5.0% after reporting an underlying annual net loss despite higher revenue.
Diplomacy hopes drag oil lower
WTI Crude eased a further -2.5% to US$92.22/bbl, Gold lost -1.6% to US$4,283.47/oz, and Iron Ore slipped -0.2% to US$97.32/MT.
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