Global stocks climb as oil prices retreat, yields ease

Global equity markets extended gains on Friday as declining oil prices — fueled by expectations of alternative Middle East shipping routes — and easing uncertainty over Federal Reserve policy boosted investor sentiment, with Brent crude retreating 1.3% to $103.40 per barrel and US Treasury yields holding steady at 4.94%.

Wall Street extends gains

The New York Stock Exchange closed Thursday with broad gains as the Dow Jones Industrial Average rose 0.61%, the S&P 500 advanced 1.14% and the Nasdaq Composite climbed 1.69%, with US stock indexes continuing higher on Friday. The yield on the 10-year US Treasury note traded flat at 4.94% amid hopes that falling oil prices will ease inflationary pressures, while the US Dollar Index remained above the 100-point threshold and gold rose 0.5% to $4,636 per ounce. Investors welcomed data showing initial jobless claims fell to 196,000 in the week ending Sept. 12, beating estimates and signaling labor market resilience, while the average diesel price in the US hit a new record of around $6.40 a gallon on Friday, according to the American Automobile Association. President Donald Trump told Axios that Washington faces a critical decision regarding the war with Iran, stating he is torn over whether to "go in and annihilate them or do I not," and separately threatened to impose heavy tariffs on the European Union or halt trade entirely over Brussels' proposal to make Canada an associate member, saying: "If it’s a bad intention, we’ll put very heavy tariffs on Europe."

European markets and monetary policy

European stock markets posted solid gains on Thursday, driven by surging auto, telecom and retail shares, with the UK’s FTSE 100 gaining 1.19%, France’s CAC 40 rising 0.57% and Germany’s DAX 40 up 0.77%. The Bank of England maintained its policy rate at 3.75% on Thursday, with Governor Andrew Bailey stating that the central bank may have to further tighten its monetary policy if the Middle East conflict persists. The BoE projected inflation could rise slightly above 4% in the first quarter of next year, while the bank also said it would reduce its bond portfolio by £46 billion ($61.5 billion) through 2034 and the eurozone’s consumer price index rose 0.4% monthly and 3.2% annually.

Asia-Pacific rallies as BoJ hikes rates

Asian equity markets traded positively near Friday’s close as energy prices fell and tech stocks rebounded, with South Korea’s Kospi rising 2.6%, Japan’s Nikkei 225 gaining 1.8% and Hong Kong’s Hang Seng up 0.7%. The Bank of Japan raised its policy interest rate by 25 basis points to 1.25% on Friday, reaching its highest level in 31 years in a seven-to-two vote, while the central bank said the economy is growing moderately but warned that the Middle East situation and rising demand for artificial intelligence continue to pose inflationary risks. The US dollar/Japanese yen exchange rate rose 0.2% to 157.2, while Japan’s inflation came in slightly below estimates at 1.9% in August.