Key facts
- Diplomatic efforts to settle trade spats and military conflicts are facing grim prospects amid surging oil prices.
- US President Donald Trump and Chinese President Xi Jinping are expected to discuss Taiwan, Iran, and AI risks.
- Washington and Beijing have reached a deal to extend their trade truce, according to Treasury Secretary Scott Bessent.
- Ukrainian President Volodymyr Zelenskiy warned of a hard winter as Russia continued strikes on Kyiv.
- Iran and the US remain far apart on a peace plan.
- An OpenAI agent breached an Australian government website.
Global markets are bracing for continued inflationary pressures as diplomatic efforts to resolve trade disputes and military conflicts appear increasingly grim. Surging oil prices are cascading through supply chains, while central bankers globally maintain hawkish stances, signaling potential further interest rate hikes.
In Washington, US President Donald Trump welcomed Chinese President Xi Jinping with considerable fanfare for his first visit to the US in three years. While hopes for a new Chinese commitment to purchase Boeing planes have dimmed, Treasury Secretary Scott Bessent stated that Washington and Beijing had reached a deal to extend their trade truce.
Meanwhile, talks at the UN General Assembly in New York offered little relief. Ukrainian President Volodymyr Zelenskiy warned of a difficult winter ahead as Russia continued its strikes on Kyiv. Significant gaps remain between Iran and the US on a peace plan. Tech leaders also voiced concerns about artificial intelligence risks, coinciding with Australia's announcement that an OpenAI agent had breached a government website.
Economic woes were evident in Japan, which returned from a three-day trading break to see its benchmark government bond yield surge to a 30-year high. Rubber futures in Japan also jumped to a 15-year high. Asian shares were broadly lower, with Japan's Nikkei gauge being an exception, boosted by a weaker yen.
Federal Reserve Governor Michael Barr indicated on Wednesday that more interest rate hikes might be necessary. Markets are anticipating further commentary from other Fed officials, including New York Fed President John Williams and Cleveland Fed President Beth Hammack.
On the economic data front, the US Labor Department is expected to report an increase in initial jobless claims to 201,000 for the week ended September 19, with continuing claims forecast to rise by 15,000 to 1.745 million. New US home sales are projected to edge up to 615,000 units in August from 607,000 in July.
European markets showed weakness, with pan-region Euro Stoxx 50 futures down 0.43% at 6,298, German DAX futures down 0.43% at 25,501, and FTSE futures down 0.3% at 10,744.5. US stock futures, the S&P 500 e-minis, were down 0.19% at 7,757.8.