Market News

• BoE’s Greene warns waiting for second-round inflation effects would be too late
• Goldman sees Europe reserve release cutting diesel by $11 but shrugs off Russian supply
• Australian business confidence slides to -13 as oil shock and rate hikes bite, NAB says
• Just 32 countries now drive 95% of global growth as AI widens the gap, IMF warns
• Kospi plunges more than 6% below 6,000 as chip selloff and oil fears hit Asian stocks
• AI compute crunch deepens as chip rental costs jump 60% and rivals scramble for power
• PBOC sets USD/ CNY central rate at 6.7298 (vs. estimate at 6.6981), strongest since 2 February 2023
• BlackRock cuts US stocks to neutral and buys Treasuries as 10-year yield nears 5.25%
• RBA minutes show three reasons for hike to 4.60% and leave…

Oil is the main pressure point: volatility tied to Houthi attacks on Saudi Arabia and the broader Iran conflict is lifting costs and denting sentiment, so any further energy spike would likely push confidence lower still. The survey highlights the RBA’s dilemma, with businesses souring under higher funding costs even as the central bank, according to minutes released today, worries about domestic capacity pressures and rising business inflation expectations. Weak confidence could argue for caution on further hikes, but the RBA has signalled it is prepared to tighten again if inflation stays sticky, leaving the Australian dollar and short-dated yields sensitive to upcoming inflation data. Mining’s relative resilience suggests…

Greene’s remarks reinforce the hawkish wing of the MPC and support market expectations of a November hike, which recent reports put at around 84%. Her warning about second-round effects ties directly to the energy shock from the Iran war: if higher oil and diesel costs feed into wages and pricing, the case for tightening strengthens further, keeping short-dated gilt yields and sterling sensitive to energy prices. The comments also add pressure on the gilt market at a time when global bond yields are already elevated. Upcoming UK wage and inflation data will be key for whether her view gains wider support on the committee.

-- Greene’s message is simple: by the time inflation shows up in wages and prices, it will be too late, so the Bank…

Diesel remains the sharpest pressure point in the energy shock from the Iran war, and Goldman’s view suggests relief depends on government stockpiles rather than extra Russian barrels. A European reserve release of the scale Goldman models would offer meaningful but temporary relief, narrowing refining margins and easing pressure on transport and industrial costs feeding into inflation. The bank’s broader view that product markets stay tight into 2027 means any relief rally in diesel could prove short-lived, keeping crack spreads elevated and refiners’ margins strong. For crude, a sustained diesel squeeze keeps demand for refinery runs high, supporting oil prices even if headline supply fears ease.

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Earlier:

• More on Russia’s diesel…

Oil is once again the dominant macro driver: with Brent near a two-week high on attacks on Saudi energy facilities and a fragile Russia-Ukraine energy truce, the inflation channel is pushing yields up and squeezing the high valuations that underpin tech-heavy Asian markets. The Kospi’s heavy weighting toward chipmakers made it the region’s most exposed market, so the depth of the drop reflects both AI rally fatigue and concentrated positioning unwinding. A firm dollar adds pressure on Asian currencies and on foreign flows into regional equities. US bank earnings and this week’s CPI data (preview, another preview) are the next tests, and any sign that energy costs are feeding into broader inflation would reinforce the hawkish rate outlook…

Oil is the pivot of the whole outlook: the IMF’s base case assumes the Strait of Hormuz reopens in March 2027, so any slippage in that timeline or escalation toward its $130 scenario would hit growth and lift inflation, keeping central banks on a hawkish path. The higher oil price assumptions, at $96 a barrel this year and $87 next, effectively validate a prolonged risk premium in crude. AI-linked exporters such as South Korea, Taiwan-adjacent supply chains, Malaysia and Mexico are the clear relative winners in the forecasts, but the IMF’s AI-unwind scenario highlights how exposed those same markets would be to any reassessment of AI profitability, a risk reflected in today’s sharp Asian tech selloff. Warnings on public debt and borrowing…

The squeeze hands pricing power to anyone who already controls chips, data centres and electricity, favouring hyperscalers, neoclouds and chipmakers over the startups trying to rent from them. Rising rental prices and tougher contract terms point to stronger near-term revenue for compute providers, but also to growing concentration risk, as only the biggest and best-funded labs can lock in capacity. The rush to overbook capacity as a hedge raises the danger of a sharp reversal if demand disappoints, leaving firms stuck with costly lease commitments and a glut of resold capacity. That fragility echoes recent warnings that financing, power and data centre delays, not demand, are now the binding constraints on the AI build-out.

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Earlier:

• <a href="https://investinglive.com/stocks/broadcom-ceo-likens-ai-boom-to-a-casino-even-as-he-targets-230-billion-in-chip-sales" target="_blank"…

The PBOC allows the yuan to fluctuate within a +/- 2% range, around this reference rate. More here on this.

more to come

BlackRock’s shift adds weight to the case that higher yields are starting to compete with equities for capital, a dynamic that could cap stock valuations even as earnings stay strong. The key swing factor is oil: Middle East war and higher crude prices have driven the sharp repricing of Fed expectations, so any easing in the Iran war would support BlackRock’s view that rate-hike bets are overdone and favour its short-end Treasury call. Conversely, a further oil spike that lifts this week’s CPI and PPI could push yields higher still and test the cushion BlackRock estimates before Treasury returns turn negative. Demand from large allocators at these yields may also help steady the long end after recent volatility, while the trimmed JGB…

The Iran war is weighing on gold through the oil channel: higher crude feeds inflation fears, keeps the Fed on its hiking path and supports the dollar, all of which work against a non-yielding metal. That makes oil the key variable to watch for gold, with any easing of Middle East supply risk likely to help the metal more than escalation would. With physical buying soft and ETF holders potentially exposed if prices slip, the downside could accelerate should the $4,000 area give way. This week’s US CPI and PPI releases and remarks from Fed Chair Warsh are the near-term tests, with hotter readings likely to add to pressure on bullion.

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Yesterday:

• Gold edges up in Asia on the energy truce narrative, that looks like a VERY shaky support
• Gold…

The minutes read hawkish, not unexpectedly, with the board explicitly keeping further hikes on the table and markets already pricing roughly another 15 basis points by year-end and 30 basis points in the first half of 2027. Oil is central to the outlook: domestic fuel prices were running well above the RBA’s August assumptions, and any further escalation of the Iran war would feed directly into the risk of more tightening. The board’s concern that a lagging RBA could weaken the Australian dollar suggests it is willing to keep pace with other central banks, which should support the currency against a backdrop of rising global yields. Rate-sensitive sectors such as banks, property and consumer discretionary remain vulnerable, given falling…