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Oil jump pushes stocks lower

Escalating hostilities between the US and Iran sent oil prices higher on Wednesday, heightening fears that an energy shock could prolong inflationary pressures and keep interest rates elevated. European and US equities closed lower on Tuesday, with technology shares particularly affected by rising government bond yields. Asian markets extended the sell-off on Wednesday, led by sharp losses in Japan and South Korea, as investors assessed the prospect of tighter monetary policy. Market participants will watch the Bank of Canada’s rate decision and US labour-market data later in the day.

  • Data
  • Autore Shane Strowmatt, Senior Investment Writer
  • Tempo di lettura 5 minuto

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Oil prices increased on Wednesday as the US and Iran exchanged further strikes, raising concerns about supply disruption in the Strait of Hormuz. Brent crude oil futures rose 4.1% to USD 95.35 per barrel, while West Texas Intermediate (WTI) futures gained 0.4% to USD 90.59 per barrel, after US forces struck Iran and Tehran reportedly targeted Kuwait, Jordan and Bahrain with drones and missiles. A tanker was hit by three unidentified projectiles while passing through the strait on Monday, underscoring risks to shipping as the conflict that began in February continues. The US Dollar Index edged up 0.1% to 99.74 points, while gold declined 0.1% to around USD 4320 per ounce and bitcoin fell 1.9% to around USD 77,700.

Asian equities fall as oil rises

Asian equities fell sharply on Wednesday as higher oil prices and bond yields revived concerns that central banks may need to keep monetary policy restrictive. Japan’s Nikkei 225 declined 2.7%, South Korea’s KOSPI lost 3.4%, Hong Kong’s Hang Seng Index fell 0.8% and mainland China’s CSI 300 declined 1.1%. Australia’s S&P/ASX 200 fell 0.9%, after Australia’s economy expanded 0.4% in the second quarter, taking annual growth to 2.1%, while New Zealand’s central bank raised its policy rate by 25 basis points to 2.75%.

US stocks fall as inflation fears grow

US equities declined on Tuesday as rising oil prices and concerns over renewed inflation weighed especially on interest-rate-sensitive technology shares. The Nasdaq-100 lost 1.3% to 29,077.22 points, while the S&P 500 dropped 0.7% to 7631.47 and the Dow Jones Industrial Average fell 0.8% to 52,766.88. In addition to higher oil prices, increasing Treasury yields were putting pressure on stocks, with US Treasury yields trading higher: the 10-year yield stood at 4.8%, its highest level since January 2025, while the 2-year yield was at 4.4%, adding pressure to technology and other growth shares.

US job openings stable, manufacturing slows

US job openings were broadly unchanged at 7.3 million in July, compared with a downwardly revised 7.2 million in June, data released on Tuesday showed. Hires and total separations both declined to 5.1 million from 5.3 million, while quits eased to 3.1 million and layoffs fell to 1.7 million. Meanwhile, the ISM Manufacturing PMI decreased to 54.6 points in August from 55.6 in July but remained above the expansion threshold for an eighth consecutive month. Taken together, the figures point to a labour market cooling only gradually alongside continued industrial expansion, while persistent price pressures in manufacturing could reinforce the Federal Reserve’s case for a cautious approach to monetary easing.

Euro-area inflation accelerates sharply

Euro-area annual inflation is estimated to have accelerated to 3.3% in August from 2.9% in July and 2% a year earlier, according to data released by Eurostat on Tuesday. Energy inflation climbed to 14.3% from 10.3%, driving much of the increase, while services inflation eased to 3% from 3.3% and core inflation edged down to 2.4%. The renewed rise in headline inflation, taking it further above the ECB’s 2% medium-term target, reinforced market expectations that the central bank will raise interest rates next week. European equities closed mixed on Tuesday, with the Euro Stoxx 50 down 0.8%, Germany’s DAX down 1.1% and France’s CAC 40 down 0.4%, while the Swiss Market Index rose 0.3%.

Euro-area factory growth reaches four-year high

The euro-area Manufacturing PMI rose to 52.7 points in August from 51.9 in July, reaching its highest level in 51 months, according to data released on Tuesday. Factory output expanded at its fastest pace in four-and-a-half years, while new orders recorded their strongest increase since early 2022, supported by a recovery in export demand. Germany and France drove the improvement.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Broadcom and Prosus.

Economic data in focus: US ADP National Employment Report (14:15), Bank of Canada interest rate decision (15:45), US durable goods orders (16:00) and Federal Reserve Beige Book (20:00).

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Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.