Oil Rally Spurs Equities Downturn Ahead of Inflation and Fed Meeting

Equities markets globally have been experiencing a downturn due to a recent surge in oil prices. This trend is often observed during September, which is considered a weak month for risk assets. The European markets were particularly affected, with many analysts pointing out that the region's reliance on imported energy makes it more vulnerable to fluctuations in global commodity prices.

The sell-off comes ahead of the US inflation data release and next week's Federal Reserve meeting. A higher-than-expected inflation print followed by a rate hike is seen as an added headwind for global markets, making investors cautious about their investments.

Seasonal patterns also suggest that equities may continue to struggle in the coming weeks. Historically, mid-term years see the S&P 500 reach its low point at the end of September, implying that there are still two more weeks left before the market tends to recover.