Higher oil prices weigh on equities ahead of key inflation data

US equities were lower on Tuesday as higher energy prices increased concerns around margins and the outlook for interest rates, while investors awaited key inflation data later in the week. The S&P 500 and Nasdaq 100 each fell 0.40%, while the Dow declined 1%. The Federal Reserve Bank of New York’s August survey showed median one-year inflation expectations were unchanged at 3.60%, although expectations for gasoline prices rose to 4.60%. Concerns around the labour market also increased, with the mean probability of higher unemployment in a year rising to 44.40%.

Technology stocks came under pressure, with Microsoft and Alphabet each falling 1%, while Amazon also declined ahead of its sterling bond offer. Oracle was an exception, gaining 5% ahead of its earnings report later this week. Higher borrowing costs also weighed on sentiment as expectations of further tightening by the Bank of Japan increased, alongside potential Japanese selling of US Treasury securities to support the yen.

European equities were mixed as investors continued to assess the implications of higher energy prices and further monetary tightening. The Euro STOXX 50 rose 0.10% to 6 413, while the STOXX Europe 600 was flat at 649.60. The DAX 40 was virtually unchanged at 26 008, while the CAC 40 gained 0.10% to 8 318. Technology stocks were mixed, with Infineon falling 3.70% in Germany, while industrial and energy shares provided support in France. The UK’s FTSE 100 followed the European trend closing largely unchanged, with losses across pharma, consumer and banking stocks offset by stronger commodity-related shares.

Asian markets were also mixed. Japan’s Nikkei 225 fell 1.70% to 65 269 as the yen strengthened and investors positioned for a potential Bank of Japan rate increase. In China, the Shanghai Composite rose 0.20%, while the Shenzhen Component fell 0.52%, despite exports rising 25% year-on-year in August. In Hong Kong, the Hang Seng Index declined 0.40% as higher oil prices and geopolitical tensions weighed on sentiment.

South Africa’s economy contracted 0.20% quarter-on-quarter in 2Q26, while local equities advanced. The FTSE/JSE All Share Index gained 0.40% to 117 461.57, supported by Financials, which rose 0.77%, while Metals and Mining declined 0.84%. At 21h32, the rand was 0.11% weaker against the dollar at R16.00, 0.09% weaker against the pound at R21.67 and 0.11% weaker against the euro at R18.61.

Brent crude rose 1.69% to $98.64 per barrel after topping $99 earlier in the session as concerns over supply disruptions intensified. Gold fell 0.91% to $4 364.49 per ounce, while silver declined 0.43% and platinum gained 0.59%.