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Markets leap higher
Confirmed
In Short: US financial markets saw a significant surge on Monday, with the S&P 500 and Nasdaq ending sharply higher, driven by gains in Advanced Micro Devices and other AI heavyweights.
The S&P 500 emini ES contract rose by 68 ticks, trading at 7823.25, while the Dec '26 30-Year T-Bond increased by 14 ticks, trading at 102.20.
Financial markets are now pricing in a nearly 58.3% chance of a 25 basis points rate hike at the Fed's September meeting, up from about 50.2% before the data.
The US dollar weakened, and crude oil prices tumbled to an 11-day low, amid speculation about potential breakthroughs in Middle East talks at a UN meeting.
Harry Woolman, global capital markets analyst at Validus Risk Management, noted that the latest figures indicate inflation may be broadening beyond the initial energy shock.
Stephanie Roth, chief economist at Wolfe Research, suggested that yields and oil prices need to come down for stocks to perform well.
Joe Brusuelas, chief economist at RSM US, warned that a hot US PPI print and a hawkish-sounding Christine Lagarde could signal a global central bank rate hike cycle, which does not support risk assets.
The MSCI Asia Pacific Index fell 1.4% after the S&P 500 Index slipped 0.5%, with Asian stocks and bonds declining following a surge in oil prices.
Despite the positive market moves, financial markets are still closely watching the upcoming US consumer price index report, which will be a key test for risk sentiment.
The impact of the Middle East crisis on global energy markets remains a concern, with countries facing different levels of direct exposure to the crisis.
The surge in oil prices to nearly US$110 a barrel pushed Treasury yields to multi-year highs, further complicating market dynamics.
The upcoming week will see a raft of global central banks meeting, with most expected to push rates higher, reinforcing bets on an imminent US Federal Reserve interest rate hike.
What this adds
The surge in US markets on Monday contrasts with the cautious sentiment surrounding potential rate hikes and inflation pressures.
The correlation between financials and the US dollar remains a key factor in market dynamics, with expectations of higher rates influencing bond and equity prices.
The upcoming US consumer price index report will be crucial in determining the direction of market sentiment and the likelihood of further rate hikes.
What's confirmed
- The S&P 500 emini ES contract rose by 68 ticks, trading at 7823.25, while the Dec '26 30-Year T-Bond increased by 14 ticks, trading at 102.20.
- Financial markets are now pricing in a nearly 58.3% chance of a 25 basis points rate hike at the Fed's September meeting, up from about 50.2% before the data.
- The US dollar weakened, and crude oil prices tumbled to an 11-day low, amid speculation about potential breakthroughs in Middle East talks at a UN meeting.
- Harry Woolman, global capital markets analyst at Validus Risk Management, noted that the latest figures indicate inflation may be broadening beyond the initial energy shock.
- Stephanie Roth, chief economist at Wolfe Research, suggested that yields and oil prices need to come down for stocks to perform well.
- Joe Brusuelas, chief economist at RSM US, warned that a hot US PPI print and a hawkish-sounding Christine Lagarde could signal a global central bank rate hike cycle, which does not support risk assets.
- The MSCI Asia Pacific Index fell 1.4% after the S&P 500 Index slipped 0.5%, with Asian stocks and bonds declining following a surge in oil prices.
- Despite the positive market moves, financial markets are still closely watching the upcoming US consumer price index report, which will be a key test for risk sentiment.
- The impact of the Middle East crisis on global energy markets remains a concern, with countries facing different levels of direct exposure to the crisis.
- The surge in oil prices to nearly US$110 a barrel pushed Treasury yields to multi-year highs, further complicating market dynamics.
- The upcoming week will see a raft of global central banks meeting, with most expected to push rates higher, reinforcing bets on an imminent US Federal Reserve interest rate hike.
What's still developing
- The Financials should always correlate with the US dollar such that if the dollar is Higher, then the bonds should follow and vice-versa.
- US markets will be closed on Monday for Labor Day.
- Or, as ANZ put it in a recent note, “the post-GFC era of low rates is over ”.
- That could happen, for example, if Friday’s inflation data were to “come in quite soft”, she said.
- “Rising oil prices will be a concern ahead of the midterms,” said Warren Patterson, head of commodities strategy at ING Groep.
- Among the main moves across markets, S&P 500 futures were little changed as at 9.04 am Tokyo time.
- There were still some positive pockets in markets.
- This issue hub brings together IEEFA’s global and regional research, data and expert commentary on how the crisis is affecting oil and gas markets, energy security and investment decisions.
- IEEFA Issue Hub: Impact of Middle East Crisis on Global Energy Markets - Updated: August 2026 Global energy markets that depend on imported fossil fuels are again exposed to volatile commodity prices and geopolitical risk.
- “Markets had pared back expectations of consecutive rate rises in recent days, after President Lagarde suggested that higher bond yields were doing some of the tightening for the ECB. Today’s inflation reading makes that argument harder to sustain,” he said.
- The size of the headline increase is significant because it comes at a time when financial markets had begun to assume that the ECB could remain on hold as higher bond yields and tighter financial conditions did some of the central bank’s work.
- Interest rates on government bonds are rising again around the world, making borrowing more expensive for consumers and businesses and heightening concerns about whether governments are issuing more debt than financial markets can handle.