Macro update
Asian stocks rebound as chipmakers recover: A recovery in semiconductor and AI-related shares, including Samsung Electronics, TSMC and SoftBank, lifted MSCI’s Asia-Pacific index excluding Japan by 0.8% after it hit a ten-week low. Japan’s Nikkei rose 0.61% to 68,193.13 at midday after falling 1.8%, although continued weakness in US chip stocks and bank shares capped gains.
Oil prices rise as Hormuz tensions escalate: Two vessels were struck in the Strait of Hormuz, while Iranian officials said they were adopting new tactics against shipping. Houthi attacks on a Saudi Aramco building in Dhahran added to supply concerns, pushing Brent to $106.27 a barrel, near a two-week high, and WTI to $94.70.
US inflation report takes centre stage: Investors awaited September CPI figures, with annual headline inflation forecast to accelerate to 3.6% from 3.4% and core prices expected to rise 0.2% month on month as energy costs rebounded.
Fed rate outlook remains uncertain: New York Fed President John Williams said another rate increase could be needed this year but not in 2027. Markets priced in a 22% chance of an October hike, a 77% probability of rates remaining unchanged at the 27–28 October meeting and an 88% chance of an increase in December.
Dollar slips as gold trades sideways: The dollar index eased to around 102.1 after falling 0.35% on Tuesday, with the euro at $1.1208, the yen at 158.19 per dollar and sterling at $1.3272. Gold held at $4,165.25 an ounce as higher oil prices and the risk of further rate increases offset one another.
Treasuries steady as bank results and Chinese data draw attention: The 10-year Treasury yield held at 5.204% and the 30-year at 5.553%, with longer-dated bonds attracting safe-haven demand. US bank shares weakened after mixed results from Citigroup and peers, while China reported a 36.3% rise in September exports and the fastest growth in producer prices in more than four years.
