As the impact of conflicts in the Middle East on energy markets continued, rising bond yields weakened risk appetite across global stock markets. Investors focused on energy costs, the inflation outlook and upcoming interest-rate decisions by major central banks.
A new attack by Yemen's Houthis targeting Saudi Arabia heightened concerns over oil supplies. The November Brent crude contract rose 1.7% to $107.40 a barrel.
Rising oil prices intensified concerns about persistent inflation, while the U.S. 10-year Treasury yield climbed to 5.03%. That was its highest level since July 2007.
Dollar index rises ahead of Fed decision
Expectations that the U.S. Federal Reserve would tighten monetary policy to combat inflation increased selling pressure in the bond market. The two-day interest-rate meeting began, and market pricing viewed an interest-rate hike as virtually certain.
The Fed last raised interest rates in July 2023. Amid expectations of a rate hike, the dollar index rose 0.1% to 99.6. Despite the increase in oil prices and bond yields, gold also rose 0.1% to $4,305 an ounce.
U.S. President Donald Trump said oil prices would fall if the conflicts with Iran ended. Trump described assessments that artificial intelligence technology would spiral out of control as a “sick conspiracy.”
Shares of artificial intelligence companies lose value
Calls to slow artificial intelligence development gained prominence in markets amid competition between the United States and China. Microsoft published a draft set of rules aimed at limiting the behavior of models it develops in the future, as debate over artificial intelligence safety continued.
The New York Stock Exchange ended the first trading day of the week lower. Nvidia shares fell 3.4%, AMD shares 4.4%, Broadcom shares 4.8%, Intel shares 5.6% and Marvell Technology shares 7.3%.
The Dow Jones index fell 0.29%, the S&P 500 index 0.48% and the Nasdaq index 0.56%. U.S. stock-index futures also started the day lower.
Selling continues in European and Asian stock markets
European stock markets were broadly negative, except in the United Kingdom. As oil prices weighed on risk appetite and the decline in technology shares accelerated, ASML shares fell 6.1% and Infineon Technologies shares 7.7%.
Italy's FTSE MIB index fell 1.68%, France's CAC 40 index 0.76% and Germany's DAX 40 index 0.50%. In the United Kingdom, the FTSE 100 index rose 0.44%. Germany's 10-year bond yield climbed to 3.55%, its highest level since 2009.
Isabel Schnabel, a member of the Executive Board of the European Central Bank, warned that rising energy prices were a cause for concern. Falling copper prices weighed on mining-company shares, while high oil prices supported energy stocks.
Asian stock markets also declined. Although China's retail sales rose 0.4% year on year in August, they fell short of expectations. Fixed-asset investment decreased 7.2%, while the unemployment rate came in above expectations at 5.3%; industrial production rose 5.2%.
Concerns about the Chinese economy persisted after the data, raising expectations that pressure on Beijing to provide fiscal support could increase. Japan's 10-year bond yield rose above 3% again.
Near the close, the Kospi fell 0.6%, the Hang Seng 0.2%, the Shanghai Composite 0.1% and the Nikkei 225 0.1%.
Borsa Istanbul ends session down 1.60%
The BIST 100 index on Borsa Istanbul ended the previous session down 1.60% at 14,235.83 points. The October contract based on the BIST 30 index on Borsa Istanbul's Futures and Options Market traded flat in the evening session compared with the regular-session close.
The dollar/Turkish lira exchange rate ended the previous session up 0.2% at 48.6170. The exchange rate traded at 48.6373 at the opening of the interbank market, just above the previous close.
Domestic data to be monitored include the budget balance, while international markets will focus on the United Kingdom's unemployment rate, the euro area trade balance and the New York Fed's Empire State Manufacturing Index. Technical assessments identified 14,100 and 14,000 points as support levels and 14,300 and 14,400 points as resistance levels for the BIST 100.
U.S. imposes sanctions on Russia's VTB Bank
The U.S. Treasury Department added Russia's leading financial institutions VTB Bank to its sanctions list, accusing it of helping evade sanctions as part of an “economic exclusion operation” targeting Iran.
