Continued conflict in the Middle East kept oil prices elevated, while rising bond yields intensified selling pressure on global stock markets. Markets are monitoring the impact of energy costs on inflation and the upcoming interest-rate decisions of major central banks.
A new attack by Yemen’s Houthis on Saudi Arabia increased concerns over oil supplies. November Brent crude futures rose 1.7% to $107.4 per barrel.
Movements in energy prices fueled concerns about the persistence of inflation. The US 10-year Treasury yield rose to 5.03%, reaching its highest level since July 2007.
Dollar index rises ahead of rate decision
Expectations that the US Federal Reserve will tighten monetary policy to combat inflation increased selling in the bond market. The two-day interest-rate meeting began, and market pricing treated a rate hike as certain.
The Fed last raised interest rates in July 2023. Driven by expectations of a rate hike, the dollar index rose 0.1% to 99.6. As oil prices and bond yields climbed, the price of gold also gained 0.1% to reach $4,305 per ounce.
US President Donald Trump said oil prices would fall if the conflicts with Iran ended. Trump described assessments that artificial intelligence technology could get out of control as “a sick conspiracy.”
Artificial intelligence companies’ shares decline
Calls to slow the development of artificial intelligence technologies came to the forefront 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 will develop in the future as debates over AI safety continue.
The first trading day of the week ended lower on the New York Stock Exchange. Nvidia shares fell 3.4%, AMD shares declined 4.4%, Broadcom shares dropped 4.8%, Intel shares lost 5.6% and Marvell Technology shares fell 7.3%.
The Dow Jones fell 0.29%, the S&P 500 declined 0.48% and the Nasdaq lost 0.56%. US index futures also opened lower.
European and Asian stocks fall
European stock markets outside the United Kingdom posted a negative performance. As rising oil prices reduced risk appetite and losses in technology stocks accelerated, ASML shares fell 6.1% and Infineon Technologies shares declined 7.7%.
Italy’s FTSE MIB fell 1.68%, France’s CAC 40 declined 0.76% and Germany’s DAX 40 lost 0.50%. The United Kingdom’s FTSE 100, meanwhile, rose 0.44%. Germany’s 10-year bond yield climbed to 3.55%, reaching its highest level since 2009.
Isabel Schnabel, a member of the Executive Board of the European Central Bank, said the rise in energy prices was concerning. Falling copper prices pressured mining companies’ shares, while high oil prices supported energy stocks.
Asian stock markets also posted losses. Retail sales in China rose 0.4% year on year in August but remained below expectations. Fixed-asset investment fell 7.2%, while industrial production increased 5.2%. The unemployment rate rose to 5.3%, exceeding expectations.
Concerns about the Chinese economy persisted after the economic data, while pressure on Beijing to provide fiscal support was judged likely to increase. Japan’s 10-year bond yield rose back above 3%.
Near the close, the Kospi fell 0.6%, the Hang Seng declined 0.2%, the Shanghai Composite lost 0.1% and the Nikkei 225 fell 0.1%.
Borsa Istanbul loss reaches 1.60%
The BIST 100 index ended the previous session down 1.60% at 14,235.83 points. The October contract based on the BIST 30 index traded flat in the evening session of Borsa Istanbul’s Futures and Options Market compared with the regular-session close.
The dollar/Turkish lira ended the previous day 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 markets will track the budget balance, while abroad, the United Kingdom’s unemployment rate, the euro area’s foreign trade balance and the New York Fed’s manufacturing index will be monitored. 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.
Russia’s VTB Bank added to US sanctions list
The US Treasury Department added VTB Bank, one of Russia’s leading financial institutions, to its sanctions list as part of an “economic exclusion operation” targeting Iran. The department alleged that the bank had helped evade sanctions.
