Global financial markets are under severe selling pressure today, amid higher-than-expected US inflation and renewed geopolitical concerns following US President Donald Trump's threats of possible new military operations against Iran, bringing the prospect of military escalation in the Middle East back to the forefront of the markets.
First: US inflation rises above expectations
Data from the US Consumer Price Index for September, released today, showed annual inflation rising to 3.7%, compared to expectations of 3.6%, and up from 3.4% in August.
The results were as follows:
- Annual inflation: 3.7% vs. expectations of 3.6%.
- Monthly inflation: 0.6% compared to 0.4% previously.
- Annual core inflation: 2.6% vs. expectations of 2.5%.
- Monthly core inflation: 0.3% vs. expectations of 0.2%.
Rising energy prices, particularly gasoline, have contributed to accelerating inflation, reinforcing concerns that the Federal Reserve will have to continue tightening monetary policy and raise interest rates again.
Second: Trump's threats to Iran bring geopolitical risks back to the forefront
Despite the importance of inflation data, geopolitical risks will be the most influential factor on the direction of markets in the coming period.
US President Donald Trump renewed his threats against Iran, indicating that a decision regarding it was imminent, amid reports of US-Israeli discussions about new military operations.
These developments raise concerns about a renewed escalation of military confrontations, especially given the ongoing threats to navigation and energy supplies in the region.
The danger of this scenario lies in the possibility of oil prices rising again, and the resulting additional inflationary pressures, higher bond yields, and a decline in investors' appetite for risk.
Third: Sharp declines in US stocks and precious metals
According to prices during the trading session:
US stock indices
- Nasdaq 100: At approximately 30,142 points, down 2.06%.
- S&P 500: At 7,701.37 points, down 1.35%.
- Dow Jones: At approximately 51,402 points, down 0.52%.
The Nasdaq's decline of more than 2% stands out as an indication of mounting pressure on technology stocks, which are affected by rising bond yields and interest rate expectations.
Precious metals
- Silver: $55.568 per ounce, a sharp drop of 6.03%.
- Gold: $4,084.51 per ounce, down 1.84%.
The rising dollar and US Treasury yields, coupled with the prospect of tighter monetary policy, are putting pressure on gold. Silver faces additional pressure due to its sensitivity to industrial activity and economic growth.
Oil and currencies
- Brent crude: $109.376 per barrel, up 0.13%.
- US crude: $95.953 per barrel, up 0.87%.
- Euro to dollar: 1.11364, down 0.55%.
- The British pound against the dollar: 1.31659, down 0.66%.
- The dollar against the Japanese yen: 158.596, up 0.19%.
These moves reflect the strength of the US dollar against major currencies, coinciding with rising interest rate expectations and continued geopolitical risks.
Fourth: What poses the greatest threat to the markets?
The main danger lies not only in rising US inflation, but also in the possibility of renewed military escalation with Iran, and the resulting new wave of rising energy prices.
If the confrontation widens, markets could face three simultaneous pressures: rising inflation, tighter monetary policy, and a slowdown in economic activity.
Therefore, the decline of Nasdaq by more than 2% and silver by about 6% does not necessarily represent the greatest risk in itself, but rather reflects the increasing sensitivity of the markets to developments that may be more impactful in the coming period.
Summary
Global markets are entering a phase where economic and geopolitical risks intertwine. While inflation data came in higher than expected, the potential for military escalation with Iran remains a key factor to watch, given its impact on oil, inflation, interest rates, and global stocks.
The prices shown are the prices at the time of monitoring during the trading session, and are not final closing prices.
