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Financial Markets Show Resilience Amid Lower Energy Prices
Confirmed
In Short: Financial markets showed resilience on Monday as energy prices fell and risk sentiment improved.
In the foreign exchange (FX) market, the US dollar demonstrated resilience in a positive risk and lower energy context, according to Fxstreet.
US stock markets rallied up 2.26% (Nasdaq) on Friday, with AI and tech names leading the advance.
Positive risk vibes and lower energy prices supported consolidation on bond markets following the past month’s heavy losses.
The front end (2-yr) ceded up to 7 basis points as markets scaled back aggressive European Central Bank tightening bets.
Financial markets are in a strange position as we move to the final weeks of Q3, with uncertainty and volatility continuing to grip markets, but oil prices falling and European and US stocks poised to open higher later on Monday.
The Bank of Japan raised interest rates to a more than 30-year high on Friday, lifting them to 1.25 percent, and said it would lift them further to counter inflation fuelled by surging energy prices and a weak yen.
The government is trying to mitigate the impact of inflation on household purchasing power, notably with a massive stimulus package adopted at the end of 2025, extensive tax breaks on energy, and measures adopted in the spring to support consumption.
Russian state-owned oil and gas company Zarubezhneft signed an agreement with Vietnam’s state energy company Petrovnam.
The IMF warned that the war in the Middle East is elevating global financial stability risks through inflationary pressures that could cause funding markets to tighten, potentially straining non-banks, private credit, and AI borrowers.
Scott Bessent, Treasury Secretary, scoffed at those who doubted the wisdom of his interventions in currency and bond markets and dared investors to bet against him.
South Africa’s energy system is undergoing a major transition as the nation has moved beyond the worst of its power crisis, according to BloombergNEF’s South Africa Transition Factbook 2026.
Investors, developers, and corporate energy buyers are planning further investment in clean power capacity, but transmission grid capacity is emerging as a limiting factor in how quickly these investments can go ahead.
What this adds
The resilience of the dollar and the rally in US stocks indicate a positive shift in market sentiment despite ongoing geopolitical tensions.
The IMF's warning underscores the potential risks to financial stability posed by the ongoing conflict in the Middle East, particularly for non-banks and AI borrowers.
The South Africa Transition Factbook 2026 highlights the importance of grid expansion for the country's energy transition and economic growth.
What's confirmed
- Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world London, September 7, 2026 – South Africa’s energy system is undergoing a major transition as the nation has moved beyond the worst of its power crisis, according to BloombergNEF’s (BNEF) South Africa Transition Factbook 2026.
- Investors, developers and corporate energy buyers are planning further investment in clean power capacity, but transmission grid capacity is emerging as a limiting factor in how quickly these investments can go ahead.
- According to BNEF, South Africa is becoming increasingly reliant on China for clean-energy equipment.
- The South Africa Transition Factbook 2026 examines how the country’s key sectors are affected by the energy transition, where new opportunities and risks are emerging, and how mineral resources, local manufacturing and further policy reforms could shape competitiveness and long-term growth.
- In 2026, corporate power purchase agreements (PPAs) are set to drive more utility-scale renewable additions in the country than government auctions for the first time.
- Corporate buyers remain the main driver of renewables through the end of the decade.
- Without faster grid expansion, South Africa’s energy transition may deliver less economic growth than expected.
What's still developing
- The investments under the so-called Partnership for Allied Construction & Trust would focus on four types of projects: investments to help bypass the Strait of Hormuz, restoration of energy flows and critical material exports, better protects assets against future attacks and rebuilding essential domestic infrastructure and import flows.
- Lane in first instance expects pressure on food prices, on energy in the broader sense including electricity, and on goods in general.
- USD/JPY is easing back below 157.00 in Asia on Monday, undermined by modest Japanese Yen strength amid looming intervention risks after Friday's BoJ rate check.
- John has over a decade worth of experience in the Financial Markets and produces a Weekly Forex Forecast covering over 30 markets each weekend.
- The 25-basis-point hike to 1.25 percent was expected by markets following the recent tightening by the European Central Bank and the US Federal Reserve, though the decision was not unanimous as it was carried by a 7-2 majority vote.
- "Given that underlying CPI inflation has been approaching two percent and financial conditions have been accommodative, the bank will continue to raise the policy interest rate," the BoJ said on its website.
- Central bankers are keeping tabs on movements in the yen, which fell to a 40-year low against the dollar in July, prompting a historic joint US-Japanese intervention in foreign exchange markets.
- "Inflation was little changed in August but there are mounting signs that higher energy costs are feeding through and we expect it to rise above the BoJ's two percent target before long," said Marcel Thieliant of Capital Economics.
- The Moscow Times reported that Vietnamese Deputy Foreign Minister Le Thi Thu Hang had previously said Hanoi expected a breakthrough in cooperation with Russia regarding oil, gas and nuclear energy – key areas of cooperation between the two countries.
- Structured into three parts and published on the Kremlin website, the 50-point document covers defense, trade, political, economic, energy, transport, agricultural, scientific, educational, health and humanitarian cooperation.
- Retaliatory tariffs issued by Canada hit some imports from the United States at one minute after midnight Eastern Time on Tuesday, intensifying a trade war between the longtime allies and risking an escalation from President Donald Trump.
- "This is a classic trade-war situation: Somebody puts on a tariff, another country retaliates dollar for dollar and then more tariffs are added," Campbell Harvey, a professor at Duke's Fuqua School of Business who studies commodity markets, previously told ABC News.