New york: Global markets are trading positively as uncertainty over the Fed's future policy roadmap eases and risk appetite rises amid declining crude oil prices and bond yields. November-delivery Brent crude oil dropped 1.3% to $103.40 a barrel, fueling optimism that inflation can be brought under control.
According to Anadolu Agency, expectations that alternative routes for oil shipments from the Middle East to global markets could be found contributed to the decline in oil prices despite persistent concerns over the conflict between Saudi Arabia and the Iranian-backed Yemeni Houthis. US President Donald Trump mentioned Washington is at a critical point in deciding the direction of the war with Iran, reflecting on the dilemma of whether to escalate military actions.
The yield on the 10-year US Treasury note is trading flat at 4.94%. This development comes amid growing hopes that falling oil prices will ease inflationary pressures, while gold is up 0.5% at $4,636 per ounce. The US Dollar Index remains strong, maintaining above the 100-point threshold, with expectations that the Fed will uphold its tight monetary policy throughout the year.
The average diesel price in the US hit a new record of around $6.40 a gallon on Friday, according to the American Automobile Association (AAA). Additionally, the number of initial jobless claims in the US fell to 196,000 in the week ending September 12, which was below estimates, reflecting a robust labor market.
US stock markets experienced gains with the New York Stock Exchange closing Thursday positively; the Dow Jones Industrial Average rose 0.61%, the S and P 500 gained 1.14%, and the Nasdaq was up 1.69%. European markets also saw an uptick, driven by rising auto, telecom, and retail shares, buoyed further by optimism over potential geopolitical tension easement.
The Bank of England (BoE) held its policy rate at 3.75%, aligning with forecasts, while six members, including BoE Governor Andrew Bailey, voted to maintain rates, and three opted for a 25 basis point increase. The BoE projected inflation might slightly exceed 4% in the first quarter of next year, and it plans to reduce its bond portfolio by £46 billion through 2034. Bailey indicated potential further monetary tightening if Middle East conflicts persist.
The eurozone's consumer price index (CPI) saw a 0.4% monthly increase and a 3.2% year-on-year rise. While the monthly figure matched expectations, the annual increase fell slightly short. In response to the EU's proposal regarding Canada, Trump threatened tariffs or halting trade, indicating potential economic tensions.
European indices saw gains on Thursday: the UK's FTSE 100 rose 1.19%, France's CAC 40 by 0.57%, Italy's FTSE MIB 30 by 0.8%, and Germany's DAX 40 by 0.77%. As Friday progressed, Asian markets traded positively, buoyed by decreasing energy prices and rebounding tech stocks.
The Bank of Japan (BoJ) raised its policy interest rate by 25 basis points to 1.25%, the highest level in 31 years, as they anticipate moderate economic growth, albeit with continued inflationary risks from the Middle East and rising AI demand. The yen further depreciated due to the non-unanimous decision, with the dollar/yen exchange rate rising to 157.2. Japan's inflation slightly missed estimates at 1.9% in August.
Near Friday's close, Asian markets showed gains with South Korea's Kospi rising 2.6%, Japan's Nikkei 225 up 1.8%, Hong Kong's Hang Seng increasing by 0.7%, and China's Shanghai Composite climbing 1%.