Global markets waver as US inflation data and Middle East tensions grip investors

World financial markets delivered a fragmented performance on Tuesday, with traders squarely focused on the upcoming US consumer price index release scheduled for Wednesday. At the same time, escalating military posturing near the Strait of Hormuz injected fresh volatility into energy markets, as the US Navy intervened against another commercial vessel in the strategic waterway. Tehran's top security official, Mohsen Rezaei, reiterated that the strait would remain closed unless Washington accepts Iran's terms, casting further doubt on diplomatic breakthroughs following Qatari-mediated talks between Oman and Iran.

Oil prices and inflation jitters weigh on sentiment

Brent crude futures for October delivery climbed 0.6% to $89.4 per barrel, reflecting persistent supply concerns that threaten to reignite inflationary pressures through elevated energy costs. Market participants are now parsing Wednesday's CPI report, which is projected to show a moderation from July's annual rate of 3.4%, though analysts caution that a slower-than-expected deceleration could upend rate-cut expectations. Chicago Fed President Austan Goolsbee described inflation as the foremost challenge confronting the US economy, underlining the high-stakes nature of the impending data release. The US Dollar Index edged up 0.1% to 99.8, while the 10-year Treasury yield settled at 4.69%, as gold advanced 0.8% to $4,401 per ounce amid ongoing uncertainty over the Federal Reserve's next policy moves.

Tech optimism cushions broader weakness

Despite the geopolitical headwinds, artificial intelligence-driven enthusiasm continued to underpin risk appetite, particularly in the technology sector. Supermicro (SMCI) bolstered sentiment after the bell on Tuesday with robust order growth, recovering profit margins, and an upbeat 2027 forecast, while CoreWeave's earnings reaffirmed strong underlying demand for AI and cloud infrastructure. These tailwinds, however, failed to prevent US benchmarks from closing in the red on Tuesday, with the S&P 500 slipping 0.32%, the Nasdaq declining 0.6%, and the Dow Jones Industrial Average losing 0.34%, though American indexes showed early positive momentum on Wednesday.

European and Asian markets diverge

Across the Atlantic, European bourses mirrored the cautious mood, as rising bond yields and elevated oil prices shaped trading patterns. The UK's FTSE 100 fell 0.17% and France's CAC 40 dipped 0.13%, while Italy's FTSE MIB 30 edged up 0.08% and Germany's DAX 40 added 0.26% on Tuesday, though European indices opened lower on Wednesday. Meanwhile, Asian markets largely advanced, driven by a tech rally across South Korea and Japan. LG Electronics surged 10%, SK Hynix jumped 5.4%, and Samsung Electronics gained 6.5%, while Kioxia Holdings and Tokyo Electron rose 4.4% and 2.3%, respectively. Japan's Nikkei 225 closed 0.8% higher, South Korea's Kospi climbed 3.5%, and China's Shanghai Composite inched up 0.2%, though Hong Kong's Hang Seng bucked the trend with a 1.2% decline near Wednesday's close, as concerns over Middle East instability and US inflation data continued to curb broader investor enthusiasm.