Oil prices advanced strongly last week as escalating hostilities around the Strait of Hormuz and across the Iranian mainland fuelled concerns over the security of one of the world's most critical energy transit routes. After a month of relative calm, attacks resumed once again, with both sides launching fresh strikes and reaffirming hardened positions. With repeated rounds of negotiations failing to produce a lasting breakthrough and tensions continuing to escalate, the prospect of a meaningful resolution appears increasingly remote. Against this backdrop, Brent crude surged +8.0%, ending the week above $96 per barrel and moving back towards the psychologically important $100 threshold. The renewed rise in oil prices also contributed to higher sovereign bond yields, as investors grew increasingly concerned that elevated energy costs could complicate the inflation outlook and force central banks to maintain a restrictive policy stance for longer than previously anticipated.
With energy prices moving sharply higher, the energy sector was one of the clear winners last week, emerging as the strongest-performing area of the global equity market. At the headline level, however, broader market performance was more subdued. The S&P 500 finished the week broadly unchanged (in dollar terms) as investors balanced growing concerns over developments in the Middle East against another round of encouraging corporate earnings from certain names related to the artificial intelligence (AI) value chain, where demand continues to accelerate. Semiconductor designer Broadcom was one such name, delivering better-than-expected results and providing an upbeat outlook that reinforced confidence in the long-term growth trajectory of AI-related spending and infrastructure investment¹. Elsewhere, equity markets were largely on the backfoot. European equities moved lower as renewed inflation concerns linked to higher energy prices pushed government bond yields higher, creating a more challenging backdrop for risk assets. The FTSE 100 was broadly flat over the week, with strong gains from energy majors such as BP and Shell largely offsetting weakness across other areas of the market. In Asia, equities also came under pressure. A sharp strengthening of the yen during the middle of the week weighed on sentiment in Japan, contributing to a -2.1% decline in the Nikkei 225 (in local currency terms), while the Shanghai Composite shed -0.6% (in renminbi) as investors continued to assess the outlook for Chinese growth.
¹ Broadcom – Second Quarter Fiscal Year 2026 Financial Results
Macro Data
| Country | Measure | Period | Actual | Forcast | Previous |
|---|---|---|---|---|---|
| UK | Bank of England Money & Credit Report | September | - | - | - |
| Nationwide House Price Index YoY | August | 1.60% | 2.10% | 1.80% | |
| US | Average Wages YoY | August | 3.10% | 3.00% | 3.20% |
| ISM Manufacturing Purchasing Manager Index | August | 54.60 | 55.20 | 55.60 | |
| ISM Non-Manufacturing Purchasing Manager Index | August | 55.40 | 54.00 | 54.10 | |
| Non-Farm Payrolls | August | 162K | 65K | -23K | |
| Unemployment Rate | August | 4.10% | 4.20% | 4.10% | |
| Europe | Flash Consumer Price Index Inflation YoY | August | 3.30% | 3.30% | 2.90% |
| Producer Price Index Inflation YoY | July | 5.80% | 5.30% | 4.60% | |
| Retail Sales YoY | July | 0.60% | 1.10% | 0.70% | |
| Unemployment Rate | July | 6.40% | 6.30% | 6.30% | |
| Japan | Retail Sales YoY | July | 4.00% | 2.90% | 0.50% |
| China | Official Manufacturing Purchasing Manager Index | August | 49.80 | 49.60 | 49.20 |
| RatingDog Manufacturing Purchasing Manager Index | August | 51.50 | 51.00 | 50.90 | |
| RatingDog Services Purchasing Manager Index | August | 51.40 | - | 50.40 | |
| Source: Refinitiv Workspace | |||||