Markets mixed as inflation pressures ease

US Treasury yields moved higher on Wednesday, with the 10-year yield reaching 5.30%, close to its highest level since 2002. The increase came despite softer-than-expected inflation data, suggesting that investors remain concerned about the broader inflation outlook and the resilience of the US economy.

The Personal Consumption Expenditures (PCE) price index rose by 0.30% in August 2026, below the 0.40% expected, while annual headline PCE inflation came in at 3.40%. The data reduced expectations of an immediate rate increase, with markets pricing in a less than 40% chance of a 25-basis-point (bps) hike in October. However, expectations of another increase in December remained largely intact.

Stronger economic data provided a counterweight to the softer inflation figures. Revised figures showed that the US economy grew at an annualised rate of 2.20% in the second quarter, up from the previous estimate of 1.50%. September’s ADP employment report also pointed to stronger-than-expected private-sector job creation, reinforcing the view that the economy continues to withstand higher interest rates.

Against this backdrop, US equities closed mostly lower as a rebound in oil prices limited gains from the slower-than-expected PCE inflation. The S&P 500 dropped by 0.20% and the Dow fell by 444 points, while the Nasdaq rose 0.20%. Technology stocks were mostly firmer ahead of Micron’s earnings release, with Alphabet rising 0.90%, Microsoft gaining 0.80%, Nvidia advancing 0.50% and Intel climbing 3.70%. Micron was unchanged. For September, the Nasdaq 100 gained 3.20%, while the S&P 500 slipped 0.40% and the Dow fell 2 280 points.

European equities ended September on a weaker note, as higher global bond yields and ongoing inflation concerns weighed on sentiment ahead of the final quarter. The STOXX 50 fell 0.80%, while the broader STOXX 600 declined 0.40%, with most sectors finishing lower. Banks slipped by around 0.50%, while energy and food and beverage stocks were among the weakest performers, each falling 1.40%.

Technology stocks provided some support, gaining 2.50% to reach their highest level in a month and making them the strongest-performing sector on the day. However, both the STOXX 50 and STOXX 600 fell by more than 2% in September. The decline in the STOXX 600 brought its five-month run of monthly gains to an end. Both indices also lost around 1% over the third quarter.

In the UK, the FTSE 100 fell for a third consecutive session, reaching a three-week low and ending September around 2% lower. Germany’s DAX and France’s CAC 40 also declined, falling 0.74% and 0.93%, respectively.

Asian equity markets mostly ended higher on Wednesday, as a sharp decline in oil prices and reduced expectations of further aggressive Federal Reserve rate hikes lifted investor sentiment. Japan led the gains, with the Nikkei 225 rising 1.94% to 66 754, supported by strong demand for technology and artificial intelligence-related stocks despite weaker industrial production data. In China, the Shanghai Composite added 0.31% to 3 842.19, helped by firm PMI readings, while Hong Kong’s Hang Seng Index gained around 0.37% to 24 613.27.

South African equities also ended September on a weaker note, with the JSE All Share Index falling 0.85% as industrial and financial stocks came under pressure. Industrials were among the biggest drags, declining 2.02% at 17h06 SAST, while financials fell 0.84%. In currency markets, the rand weakened by 0.20% against the US dollar at 20h45, trading at R16.43. The yield on the benchmark 2035 government bond fell by 7 bps to 8.76%.

Investors also digested a series of domestic economic releases, including a preliminary trade surplus of R20.5 billion for August. M3 money supply growth accelerated to 8.89% year on year, while private-sector credit growth increased to 7.47%.

Gold prices fell by 0.68% at 20h45 on Wednesday, trading at $4 152.67 an ounce. The precious metal remained on track for a monthly decline of more than 5% in September. Silver and platinum-group metals also attempted to recover, although higher global bond yields continued to weigh on precious metals. In the energy market, oil prices rose, with Brent crude trading at around $103.50 a barrel.