Global Markets Mixed as Oil Surges Amid Mideast Tensions and Rate Hike Fears

Global markets experienced a mixed trading session as escalating Middle Eastern tensions and anticipation of interest rate decisions in Europe and the US created uncertainty. While stock markets attempted cautious optimism, a two-month high in oil prices and rising bond yields underscored persistent concerns about inflation. Asian markets traded unevenly, influenced by mixed Chinese macroeconomic data and a strengthening Japanese yen. South Korea's Kospi index rose 2.1%, Shanghai saw a modest 0.4% gain, and Japan's Nikkei was nearly flat, up 0.1%. However, Hong Kong's Hang Seng index fell 0.4%. Chinese trade data revealed weaker domestic demand, with imports rising 28.2% in August, missing forecasts.

Wall Street is set for a mixed opening after a holiday closure, with Dow Jones futures down 0.6%, S&P 500 futures trading near flat, and Nasdaq futures up 0.5%. Last week, US markets saw minimal changes, with sentiment heavily swayed by shifting expectations for the Federal Reserve's September interest rate decision. Strong August employment data, showing 162,000 jobs added against a forecast of 53,000, increased market pricing for a rate hike to around 60%. The upcoming consumer price index report is now a key factor for the Fed's decision.

Global oil prices surged for a third consecutive day, with Brent crude exceeding $97 per barrel and WTI surpassing $92, driven by potential supply disruptions. Attacks by Yemen's Houthis on Saudi Aramco facilities and Iran's threats to close the Strait of Hormuz, through which about 20% of global oil supply passes, heightened market uncertainty. OPEC+ production cuts further supported tight supply. Analysts anticipate continued volatility due to the ongoing Middle East conflict, with Deutsche Bank noting the escalation of tit-for-tat actions against commercial shipping.

The Tel Aviv Stock Exchange is expected to open lower, with the TA-35 index theoretically down 0.46%, influenced by negative arbitrage gaps from dual-listed stocks returning after Wall Street's Labor Day holiday. Technology and defense stocks are anticipated to weigh on the index. Yesterday, the local exchange saw mixed trading without US market influence, with the TA-35 index rising 1% and the TA-90 index falling 0.7%. The technology index gained 2%, supported by companies like Tower and Nova, while real estate stocks weakened.