Markets Mixed as Fed Hike Expectations Cooldown and Middle East Tensions Rise
Global markets kicked off the week with mixed movements, even as expectations for a Fed rate hike cooled. The likelihood of the Fed holding its policy rate steady this month surpassed 80%, while a 25-basis-point hike in December is now seen as nearly certain. Investors are closely watching the Fed’s upcoming meeting minutes and global PMI data for further clues.
Geopolitical tensions, particularly in the Middle East, added to market volatility. The Iranian-backed Houthi group claimed attacks on Saudi Aramco facilities, pushing Brent crude oil above $100 per barrel. The US is reportedly preparing to send additional military support to Israel, heightening concerns over regional stability.
The US Dollar Index rose 0.5% to 102.5, its highest level since April 2025, as demand for the safe-haven currency increased. Gold prices dipped 0.2% to $4,134 per ounce, while silver gained 1.1% to $61 per ounce, driven by expectations of a global rally.
European markets saw gains last week, with major indexes like the FTSE 100, CAC 40, and DAX 40 rising. However, trading activity in Asian markets remained subdued, with Japan’s Nikkei 225 up 2.2% and Hong Kong’s Hang Seng down 0.3%. Japan’s economic data showed slowing activity, with its services PMI falling to 51.3 in September.