Global markets diverged as easing oil prices helped Wall Street rebound despite sticky US inflation strengthening expectations for a Federal Reserve rate hike. European equities advanced on stronger UK growth and technology gains, while Asia-Pacific retreated as elevated energy costs and tightening concerns pressured regional technology stocks.
Wall Street shrugs off sticky inflation
US stocks rebounded as lower oil prices eased inflation concerns despite hotter data reinforcing expectations for a Federal Reserve rate hike next week. The Dow gained +1.0%, while the S&P 500 rose +0.9%, and the NASDAQ advanced +1.0%. August CPI rose +0.4% month-on-month and +3.4% year-on-year, while core inflation increased +0.3%, slightly above expectations. Dell jumped +12.0% and Cisco gained +4.4%. Oracle finished -1.7% lower despite stronger-than-expected earnings and cloud infrastructure revenue more than doubling, while SpaceX (+2.0%) advanced after securing a new AI compute deal. Over the weekend, Anthropic CEO Dario Amodei and OpenAI CEO Sam Altman backed slowing advanced AI development, while President Trump pushed back, saying ‘whoever wins AI wins.’ Meanwhile, White House advisers have reportedly discussed the possibility that the Iran war could extend beyond January 2029. Consumer sentiment fell to 47.8 in September from 51.7, while one-year inflation expectations climbed to +4.6%. In rates markets, the US two-year Treasury yield climbed +8bp to 4.63%, touching its highest level since July 2024, while the 10-year yield added +3bp to 4.97% as markets increased expectations for a +25bp Federal Reserve rate hike next week.
UK growth brightens Europe
European markets advanced as easing energy prices supported sentiment, while stronger-than-expected UK growth provided a further boost. The STOXX 600 gained +0.5%, while the UK’s FTSE 100 rose +0.4%, Germany’s DAX and France’s CAC 40 both added +0.8%. Technology stocks strengthened, with Infineon surging +5.0%. UK GDP grew +0.4% month-on-month in July, beating expectations for no growth, while annual growth of +1.6% exceeded forecasts for +1.2%, driven largely by services.
Oil and rate fears rattle Asia-Pacific
Asia-Pacific markets, lacking the US’ strong lead, fell as elevated oil prices and rising bond yields intensified inflation and rate-hike concerns across the region. South Korea’s KOSPI dropped -1.8%, with Samsung Electronics (-3.5%), SK Hynix (-2.2%), and SK Square (-4.1%) lower despite semiconductor exports surging +270% year-on-year in the first 10 days of September. Japan’s Nikkei 225 lost -1.9% as expectations for further Bank of Japan tightening weighed on technology stocks, with Kioxia (-7.0%), Advantest (-6.5%), and SoftBank Group (-4.0%) lower. China’s Shanghai Composite fell -1.2%, while Hong Kong’s Hang Seng declined -0.6%, with Sun Hung Kai Properties plunging -7.3%. In contrast, Chinese AI chipmaker Enflame surged +179.2% on its Shanghai trading debut amid strong demand for domestic semiconductor alternatives. Australia’s ASX 200 fell -0.9% as recession concerns intensified, with PLS Group dropping -7.4%. New Zealand’s NZX 50 lost -1.0% amid higher oil prices and inflation concerns, with Serko falling -5.5%.
Oil pulls back after relentless rally
WTI Crude fell -2.4% to US$100.05/bbl, Gold added +0.7% to US$4,347.32/oz, and Iron Ore fell -1.4% to US$98.02/MT.
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