Red Sea Tensions Ease, Oil Prices Plummet as US Futures Turn Positive
A sudden de-escalation in Red Sea tensions sent international oil prices plummeting, triggering a rapid rally in Asia-Pacific equities at midday on September 11. The news came as Yemen's Houthi rebels indicated that fighting along the western coast had stopped, contradicting Trump's earlier statement that oil prices might not retreat until after the November midterm elections.
Global risk assets had been under pressure amid heightened volatility, with US August Producer Price Index (PPI) data coming in hotter than expected. The 5.4% year-over-year increase pushed the probability of a Federal Reserve rate hike in September above 70%, and the 10-year Treasury yield approached 5%. However, the market's reaction to rate hikes is not monolithic, with some analysts arguing that consecutive hikes are what equities truly fear.
Oracle reported fiscal 2027 first-quarter results that far exceeded market expectations, with cloud infrastructure segment revenue surging 121% year-over-year. The company raised its full-year guidance and provided a positive signal for AI infrastructure demand, sending shares up 8% in after-hours trading. Meanwhile, Trump pledged $5,000 payouts to all American adults if Republicans win, totaling $1.3 trillion, intensifying fiscal deficit concerns.