Global Markets Rally on Dovish Fed Signals, Oil Prices Climb on Middle East Tensions
05 September 2026 · Evening
Global markets saw a rebound with US equities gaining, driven by dovish comments from a Federal Reserve official that eased immediate rate hike concerns.
However, geopolitical risks in the Middle East intensified, leading to upward revisions in Brent crude oil forecasts by major banks.
Meanwhile, global bond markets faced supply concerns as Norway's sovereign fund proposed reducing its government bond holdings, potentially impacting US Treasuries.
Investors are now keenly awaiting the release of August US employment data, which could provide further clarity on the economic trajectory and monetary policy outlook.
European economic data presented a mixed picture, with weak retail sales contrasting with strong industrial orders, while the UK's construction sector continued its contraction.
Global Markets
Detail
S&P 500
Closed at 7,747.71 on September 3rd.
+1.06%
Nasdaq
Closed at 26,584.06 on September 3rd.
+1.40%
STOXX 600
Trading at 649.48 as of 19:45 KST on September 4th.
+0.06%
Nikkei 225
Closed at 65,020.87 on September 4th.
+1.26%
CSI 300
Closed at 4,548.05 on September 4th.
-0.10%
KOSPI
Closed at 6,687.21 on September 4th.
+1.64%
Hang Seng
Closed at 25,650.87 on September 4th.
+1.74%
Dollar Index (DXY)
Closed at 99.09 on September 4th.
+0.09%
USD/JPY
Closed at 156.34 on September 4th.
+0.35%
EUR/USD
Closed at 1.16 on September 4th.
-0.04%
USD/KRW
Closed at 1,350.90 on September 4th.
-0.37%
USD/CNY
Closed at 6.71 on September 4th.
-0.11%
US 10-Year Yield
Closed at 4.772% on September 3rd.
-0.8bp
US 2-Year Yield
Closed at 4.340% on September 3rd.
-3.1bp
Japan 10-Year Yield
Closed at 2.909% on September 4th.
-3.9bp
Germany 10-Year Yield
Trading at 3.351% as of 19:45 KST on September 4th.
-0.2bp
Korea 10-Year Yield
Closed at 4.361% on September 4th.
-0.2bp
US HY Spread
Closed at 266bp on September 2nd.
+1.0bp
WTI
Closed at 90.56 on September 4th.
-0.81%
Gold
Closed at 4,473.61 on September 4th.
+0.02%
Copper
Closed at 6.64 on September 4th.
-0.37%
VIX
Closed at 14.31 on September 3rd.
-5.79%
United States
New York Stocks Rebound Ahead of Jobs DataVIX -5.79%
The S&P 500 rose +1.06% and Nasdaq gained +1.40%, signaling a clear return to risk appetite.
The VIX volatility index dropped 5.79%, as markets awaited August non-farm payrolls.
Dovish comments from a senior Fed official reportedly tempered bets on an imminent rate hike.
US Probes Iran Wedding Strike5 Dead
The US launched an investigation into a bombing at a wedding in southern Iran, which killed 5 and injured over 68.
Analysis of video and photos suggests the explosion was likely a direct hit by a US munition.
Vice President Vance announced the US authorities are currently investigating the incident.
US Intensifies Iran Economic BlockadeUAE Halts Trade
US pressure to block oil exports and prevent sanctions evasion is severely impacting Iran's economy.
The UAE's decision to halt trade and financial transactions has crippled Iran's key commercial hubs.
Iranian officials report increasing difficulty in sustaining the economy, with average monthly wages falling to one-third of basic household expenses.
Fed Waller Signals Rate Freeze9월 Hike 50%
Fed Governor Christopher Waller stated he would support a rate freeze if future data confirms easing inflationary pressures.
Market bets for a mid-September rate hike dropped to 50%, down significantly from 63% the previous day.
The focus has shifted from the rate decision itself to next week's August Consumer Price Index (CPI) data for economic direction.
August US Employment Data AnticipatedNFP +56k Est.
August non-farm payrolls are expected to increase by 56,000, rebounding from a 23,000 decline in July.
The unemployment rate is projected to remain at 4.1%, with annual wage growth expected to slow to 3.0% from 3.2%.
A potential decrease in Haitian immigrant employment due to the end of Temporary Protected Status could limit the recovery.
Trump Envoys to Visit Russia and UkraineTASS Report
TASS reported that Trump envoys Witkoff and Kushner are scheduled to visit Russia and Ukraine on September 6-7, though this is unconfirmed.
The two envoys have been central to Ukraine peace negotiations, having met with Putin for four hours in January.
Discussions for a simultaneous visit to Ukraine are ongoing, with September 6 mentioned as a possible date.
NVIDIA (NVDA)Acquisition
Announced a $12.9 billion acquisition of AI open-source platform Hugging Face, aiming to expand its ecosystem.
The deal is expected to close by H1 2027, with up to $1 billion in equity compensation to retain employees.
Also confirmed the October launch of RTX Spark AI PCs with Lenovo and Acer partnerships.
NextEra Energy (NEE) & Dominion Energy (D)Merger Approved
Shareholders approved the $66.8 billion merger, advancing a major restructuring in the energy sector.
The special shareholder meeting saw 671.32 million votes in favor of the integration.
Broadcom (AVGO)Q4 Guidance Miss
Q3 revenue of $29.59 billion and adjusted EPS of $3.32 both topped consensus estimates.
However, Q4 revenue guidance of $34.8 billion fell below market expectations, leading to a pre-market stock decline.
The CEO projected $350 billion in AI semiconductor shipments over the next two years and raised FY2026 AI revenue guidance to $58 billion (+186% YoY).
Microsoft (MSFT)Reporting Change
Will restructure its financial reporting into two segments (Applications & Infra, Devices & Consumer) from FY27.
Azure revenue will be disclosed separately for the first time, enhancing cloud transparency.
Bank of England Governor Andrew Bailey pointed to weak productivity, pandemic shocks, aging populations, and increased defense spending as structural factors driving up advanced economy public debt.
He warned that high debt levels directly lead to increased government borrowing costs, exacerbating bond market tensions.
Bailey expressed caution regarding forward guidance on monetary policy, emphasizing the need for flexibility.
UK Construction Sector Contracts for 20th MonthPMI 44.3
The S&P Global Construction Purchasing Managers' Index (PMI) registered 44.3, indicating the UK construction sector's 20th consecutive month of contraction.
The downturn was primarily led by a sharp decline in housebuilding activity.
This prolonged slump reflects ongoing challenges in the sector, particularly in residential construction.
UK Construction PMI44.7
The UK Construction PMI remained at 44.7, falling below the market expectation of 45.5 and significantly below the 50-point growth threshold.
Housing construction activity sharply deteriorated, though commercial and civil engineering sectors saw slight improvements.
High interest rates and household debt continue to suppress housing demand, signaling a negative outlook for the economy.
UK Business Inflation Expectations3.8%
UK businesses' one-year ahead inflation expectations eased to 3.8%, down 0.1 percentage points from the previous 3.9%.
The Bank of England's Decision Maker Panel (DMP) survey indicated a slight moderation in three-month ahead inflation expectations.
Wage expectations remained stable at 3.4%, suggesting limited concerns about a wage-price spiral, a key indicator for central bank policy.
Euro Zone Retail Sales-0.6% M/M
Euro Zone retail sales declined by 0.6% month-over-month in July, missing Reuters' poll expectation of a 0.3% increase.
Year-over-year, retail sales grew by 0.6%, also below the Reuters' poll forecast of 1.1%.
These figures suggest weaker consumer spending in the Eurozone than anticipated.
German Industrial Orders+2.5% M/M
German industrial orders rose by 2.5% month-over-month in July, significantly exceeding the forecast of a 0.3% increase.
This strong rebound indicates potential resilience in Germany's industrial sector despite broader economic concerns.
Irish Economy PerformanceGDP +10.2%
Ireland's domestic economy contracted by 0.8% in the second quarter.
However, the country's GDP saw a robust increase of 10.2% during the same period, highlighting the impact of multinational corporations.
Norway's Sovereign FundProposes Cuts
Norway's $2 trillion sovereign wealth fund has proposed significant reductions to its holdings of US Treasury bonds.
This move could have implications for global bond markets and the demand for US government debt.
ECB Rate Hike ForecastsDec Hike
J.P. Morgan and BNP Paribas are forecasting a December rate hike by the European Central Bank.
This outlook comes as energy risks continue to linger, influencing inflation expectations and monetary policy decisions.
Bank of England's Bailey on DebtHigh Debt Levels
Bank of England Governor Andrew Bailey noted that high debt levels reflect substantial challenges for governments.
He added that these challenges contribute to pressure on bond markets, indicating long-term fiscal concerns.
UK Car Registrations9th Month Rise
UK car registrations increased for the ninth consecutive month, signaling continued recovery in the automotive sector.
Attention now turns to September sales figures for further insights into market trends.
Volkswagen RestructuringTimeline
Volkswagen is undergoing a significant restructuring process.
A timeline for these changes has been outlined, indicating strategic shifts for the automotive giant.
Middle East
Brent Crude Forecasts Raised on Supply RisksCiti $86/bbl
Citi and ANZ raised their Q3 Brent crude forecasts to $86 and $95 per barrel, respectively, citing deepening Middle East supply disruptions.
Hormuz Strait traffic sharply declined to 4 vessels on Thursday, significantly below the 10-day average of 15, reflecting severe maritime supply constraints.
Citi described the current situation, with US sanctions on Iran and reduced Hormuz Strait traffic, as 'unsustainable'.
Israel Clears Hezbollah Tunnels in LebanonHezbollah Tunnels
Israeli Defense Minister Israel Katz announced the completion of clearing Hezbollah underground tunnels under the strategic Ali al-Taher ridge.
This area has seen intense conflict despite a ceasefire agreement signed in June.
The International Committee of the Red Cross (ICRC) reported no access to Israeli detainees since October 2023.
Japan
Japan Household Spending Declines for Eighth MonthYoY -3.6%
Japan's household spending fell 3.6% year-over-year in July, marking the eighth consecutive monthly decline.
The figure was worse than the expected 1.6% decrease, indicating persistent weakness in consumer demand.
This ongoing contraction highlights challenges for economic recovery amid rising living costs.
Government Budget Requests143.1T Yen
Total government ministry budget requests swelled to 143.1 trillion yen (approximately $920 billion), reaching levels seen during the COVID-19 pandemic.
This expansion clashes with Prime Minister Takaichi's stance to limit new government bond issuance to around 40 trillion yen, a policy Finance Minister Katayama is also reflecting.
The situation highlights an inherent tension between the need for expansive fiscal policy and the goal of curbing national borrowing costs.
Household Spending-3.6% Y/Y
Japan's household spending dropped by 3.6% year-over-year in July, more than double the market expectation, marking the eighth consecutive month of decline.
The magnitude of the decline significantly exceeded the median market forecast of -1.6%, signaling a deepening weakness in household consumption.
On a month-over-month, seasonally adjusted basis, spending increased by only 0.5%, well below the expected +2.6%, and will be a key economic indicator for the BOJ's September rate hike decision.
Yen Performance+2.2% Weekly
The yen strengthened by 2.2% this week, marking its strongest performance in over 30 days, as a 99% probability of a BOJ rate hike triggered a surge in short position liquidations.
The dollar-yen pair reached a low of 155.25 this week, indicating a stronger yen, but is currently trading at 156.45, with the August low of 155.20 remaining a resistance level.
JPMorgan analysis suggests that a full liquidation of short positions could lead to a rapid appreciation of the dollar-yen to the 142-146 range.
JGB Yields30Y 4.195%
The yield on Japan's 30-year government bond reached 4.195%, nearing a historic high, while the 10-year yield surpassed 3% for the first time since 1996.
This concurrent rise in long-term bond yields is leading to the unwinding of steepening curve bets, with 30-year yields down 10.5 basis points and 40-year yields down 13 basis points.
Major domestic bond buyers like Nippon Life Insurance are reassessing Japanese Government Bonds (JGBs) due to high yields, potentially leading to a return of domestic capital.
China
Chinese Rare Earth Firms Delay US ShipmentsTrade Tensions
Reports indicate some Chinese rare earth companies are voluntarily delaying shipments to the US, despite holding export permits.
This action comes ahead of President Xi Jinping's upcoming visit to the US.
The delays suggest continued potential for trade friction between the two economic powers.
Rare Earth Shipments to USHalted
Chinese rare earth suppliers are reportedly refusing some shipments to the United States, citing concerns over geopolitical tensions.
Despite holding export licenses, deliveries continue to be rejected, impacting industries reliant on rare earths such as defense, semiconductors, aerospace, and energy.
This issue is expected to be a key agenda item during President Xi Jinping's upcoming visit to Washington.
Pacific Summit on ICBM TestConcerns Expressed
Leaders at the Pacific summit expressed concerns over China's July test of a nuclear-capable intercontinental ballistic missile (ICBM), with only Nauru dissenting.
Palau, the host nation, is pushing for a rule requiring at least 24 hours' prior notification for missile tests, which Beijing strongly criticized as a malicious act.
Taiwan also raised suspicions of Chinese espionage activities during the summit.
Commercial Banks & US TreasuriesBuying Treasuries
Chinese commercial banks have increased their purchases of US Treasuries after raising dollar deposit rates.
Some dollar deposit accounts have seen rates increase to over 3% since June, reflecting a shift in dollar asset management strategy.
This move aims to pursue higher-yielding assets and potentially manage excessive yuan strength.
Yuan Strength6.7165/USD
The yuan strengthened to 6.7165 per dollar in spot trading, gaining 13 pips from the previous day and reaching its highest level since February 2023.
This appreciation occurred during a period of dollar weakness, yet the central bank's reference rate maintained a weaker bias, suggesting mixed policy signals.
Chinese Stock PerformanceCSI300 -1% Wk
Chinese stocks are headed for a weekly loss as the AI rally loses steam and US yields rise.
The CSI300 index was up +0.4% today but down approximately 1% for the week, while the Hang Seng index gained +2.1% today, up +0.6% weekly.
Consumer goods led with a +2.6% rise, contrasting with weakness in AI supply chain stocks.
Central Bank Reverse Repo500B Yuan
China's central bank is set to conduct 500 billion yuan of 3-month outright reverse repos on September 7.
This operation aims to manage liquidity in the financial system.
Baowu (steelmaker) Stake in BHP MineEyes 15-25% Stake
China's largest steelmaker, Baowu Group, is reportedly considering acquiring a 15-25% stake in BHP's Jimblebar iron ore mine in Australia.
The Jimblebar mine is projected to produce approximately 62.5 million tons by 2026, accounting for about a quarter of BHP's total output.
Emerging Markets
RBNZ Hikes Rate by 25bpRate 2.75%
The Reserve Bank of New Zealand (RBNZ) raised its policy rate by 25 basis points to 2.75% on Wednesday.
A Monetary Policy Committee member stated the decision was a 'clear consensus' to reinforce the central bank's commitment to returning inflation to target.
The RBNZ signaled further hikes may be needed but emphasized a 'measured' pace for future actions.
Kazakhstan Central Bank Rate Cut16.25%
Kazakhstan's central bank cut its key interest rate by 50 basis points to 16.25%, lower than the market expectation of 16.50%.
Despite the cut, the central bank raised its 2027 inflation forecast to 6.5-8.5% from the previous 5.5-7.5%, citing rising external inflation and increased fiscal stimulus.
The bank indicated limited room for further rate cuts due to intensifying inflationary pressures and external risks.
Dangote Refinery IPO (Nigeria)$1.55-1.8B
Nigeria's Dangote refinery is expected to raise between $1.55 billion and $1.8 billion through its initial public offering (IPO).
The offering will involve selling 4.1 billion shares at a price range of 500-595 naira, with an indicative price of 525 naira, with orders commencing on September 14.
Markets & Commodities
Australian Dollar Reaches 4-Month HighAUD $0.7208
The Australian dollar broke above $0.7208 against the US dollar, reaching a four-month high.
This surge was driven by broad US dollar weakness and receding bets on further advanced economy rate hikes.
The AUD is now targeting its 2026 annual objective of $0.7277, while the New Zealand dollar continues to weaken due to dovish central bank policy.
Australia Housing Market Expected to Weaken6-12 Months
A Reuters poll of Australian property experts forecasts the housing market downturn to persist for at least 6-12 months.
High-end properties in Sydney and Melbourne are expected to lead the decline.
The downturn is attributed to three RBA rate hikes, which increased borrowing costs to 4.35%, and changes to property investment tax.
USD/JPY Drops 287 Points3rd Largest Fall
The USD/JPY pair experienced a 287-point drop on Thursday, marking its third largest decline in 2026.
Larger drops in April and July were linked to direct intervention by Japanese authorities.
The pair is currently holding above the August low of 155.20, but downward pressure persists amid increased, though limited, trading volume.
India
Interbank Call Rate4.95%
India's Weighted Average Call Rate (WACR) fell to 4.95%, collapsing below the RBI's Standing Deposit Facility (SDF) floor of 5.00% for the second consecutive day.
The banking system's liquidity surplus exceeded 10 trillion rupees (approximately $106 billion) for the first time.
The RBI attempted to absorb liquidity by conducting a 3-day variable rate reverse repo auction of 1.5 trillion rupees (about $16 billion).
Q2 GDP Growth7.8%
India's GDP grew by 7.8% in the April-June quarter, surpassing the market consensus of 7.1%.
However, former central bank governors and others have raised concerns about the potential overstatement of growth, leading to a clash with the government.
Critics point to a structural issue where strong GDP growth is not translating into increased employment or corporate investment.
Indian Rupee Stability94.46/USD
The Indian rupee remained stable at 94.46 against the dollar at market opening, slightly stronger than yesterday's 94.4850, due to RBI's dollar selling intervention.
The rupee achieved its strongest level in the past two months this week, making it the strongest performing Asian currency after the Korean Won.
Central bank dollar sales and one-off capital inflows have offset depreciation pressures caused by rising oil prices.
Indian Stock MarketRebounds
Indian shares opened higher after four consecutive days of declines, driven by reduced bets on a US Federal Reserve rate hike.
This shift followed comments from Fed Governor Waller, who supported maintaining current interest rates if inflation easing is confirmed.
The probability of a Fed hike at the mid-September FOMC meeting dropped from 63% to 50%, improving global stock market sentiment.
Private Bank CEO ChangesConcerns
Major Indian private banks, including HDFC Bank, are experiencing a series of CEO changes, with successor positions remaining vacant.
HDFC Bank has exceeded the RBI's six-month deadline to fill its CEO vacancy, increasing regulatory pressure.
Rapid management changes raise concerns about the continuity of medium-to-long-term business strategies and could potentially reduce stock valuation premiums.
Renewable Energy Storage MandateFrom July 2027
India will mandate battery storage for new solar and wind projects from July 2027, requiring a minimum of 10% of plant capacity for two hours of storage.
From July 2029, the storage duration requirement will increase to four hours.
This policy aims to mitigate the variability of renewable energy and enhance grid stability.
Korea
Semiconductor Investment Talks with USOngoing
An official from the Presidential Office confirmed ongoing semiconductor investment negotiations between South Korea and the United States.
The talks are proceeding amidst tariff pressures, with US Commerce Secretary Lutnick's comments on semiconductor tariffs influencing the bilateral discussions.
Although the Presidential Office stated that 'Korea-US security negotiations are not currently underway,' semiconductors are part of the broader negotiation agenda.
South Korea is considering military options to support free navigation in the Hormuz Strait, though no deployment decision has been made.
Military options under review include maritime patrol aircraft, naval supply ships, and mine countermeasure units.
This consideration is viewed as a measure for Korea-US alliance risk management and a signal to the United States.
Current Account Balance+3.9x YoY
South Korea's current account balance for July reached $42.08 billion, marking a 15% decrease compared to June's $49.73 billion.
The cumulative balance from January to July surged to $233.09 billion, approximately 3.9 times higher than the $59.82 billion recorded in the same period last year.
Geopolitical & Economic DiscussionsUnder Review
South Korea is currently engaged in discussions with the United States regarding chip investments, addressing ongoing tariff concerns.
The nation is also reviewing potential military options concerning navigation through the Strait of Hormuz, though no final decision has been made.
Latin America
Brazil Income Inequality13.1% Record
Brazil's top 1% income share reached a record 13.1% in 2024, based on tax declaration data.
This trend of increasing income concentration among the wealthy contrasts with President Lula's stated goals of improving inequality, with expansionary fiscal policies cited as a contributing factor.
Such policies are noted for potentially leading to high inflation, changes in savings structure, and investment distortion.
Vale (VALE) Base Metals IPOPostponed
Vale (VALE) has indefinitely postponed the initial public offering (IPO) of its subsidiary, Vale Base Metals.
The decision, initially planned for mid-March, reflects political opposition and concerns over the outflow of strategic assets.
Politicians worry that increased foreign ownership of critical mineral assets like rare earths and copper could weaken national control.
Argentina Falklands Oil SanctionsSanctions Imposed
President Milei is pursuing sanctions against companies, including Navitas Petroleum and Rockhopper, involved in oil development in the Falkland Islands.
These measures aim to strengthen Argentina's sovereignty claims and are accompanied by increased defense resources in the southern region and a parliamentary bill for sovereignty protection.
The announcement followed remarks by former US President Trump, indicating a broader international political context.
Argentina Household NPLs16-Year High
Household non-performing loans in Argentina have reached their highest level in 16 years, according to central bank data.
The proliferation of fintech loans, exceeding 10 million, exacerbates a vicious cycle where gig workers, facing vehicle seizures, resort to high-interest app loans to quickly resume work.
The Milei government interprets this rise in NPLs as a temporary side effect of credit expansion, potentially underestimating the structural issues.
Top Gainers
Detail
Robinhood Markets (HOOD)
After-hours trading saw a -1.84% dip.
+16.57%
Coinbase Global (COIN)
After-hours trading saw a -1.37% dip.
+10.14%
Palantir Technologies (PLTR)
After-hours trading saw a -1.19% dip.
+7.71%
ServiceNow (NOW)
After-hours trading remained flat.
+6.49%
Principal Financial Group (PFG)
After-hours trading saw a +0.41% rise.
+6.47%
Axon Enterprise (AXON)
After-hours trading saw a +0.59% rise.
+6.15%
Oracle (ORCL)
After-hours trading remained flat.
+5.69%
CrowdStrike Holdings (CRWD)
After-hours trading saw a -0.27% dip.
+5.68%
Tesla (TSLA)
After-hours trading saw a -2.94% dip.
+5.42%
Hewlett Packard Enterprise (HPE)
After-hours trading remained flat.
+5.04%
Companies
AbbVie (ABBV)Drug Trial Success
Its multiple myeloma drug etentamig met all primary endpoints in Phase 3 (CERVINO) with a 74% response rate (vs. 45.7% for control) and a 60% reduction in progression-free survival risk.
Completed the acquisition of Apogee Therapeutics, with expected EPS dilution in 2026-2027 but profit contribution from 2032.
T-Mobile (TMUS)CFO Retirement
CFO Peter Osvaldik confirmed retirement in February 2027, with Jessica Wool named as successor.
The company maintained its 2026 financial guidance and capital return policy.
Williams (WMB)Acquisition Complete
Completed the acquisition of Momentum Midstream, expanding its asset base.
RTX (RTX)Poland Investment
Its subsidiary Pratt & Whitney is investing $25 million to expand precision component manufacturing in Niepołomice, Poland.
The investment is supported by the Polish Investment Zone Programme and is expected to create over 120 new local jobs by 2028.
Oracle (ORCL)Earnings Preview
Set to announce earnings on September 10, with analysts expecting a 28.3% increase in revenue to $19.144 billion and EPS of $1.74.
Expected revenue is near the upper end of the company's guidance range ($18.96B-$19.25B).
Intel (INTC)Target Lowered
Mizuho analysts lowered their price target from $109 to $92.
Micron Technology (MU)Union Talks Fail
Failed to reach an agreement in its first arbitration with the Taoyuan union in Taiwan.
A second arbitration meeting is scheduled, with additional employee compensation details expected in the coming weeks.
Costco (COST)Targets Lowered
Two analysts lowered price targets: Deutsche Bank from $1120 to $1091 (-2.6%) and Bernstein from $1194 to $1144 (-4.2%).
Merck (MRK)Target Raised
Wells Fargo raised its price target from $150 to $170.