MARKET WRAPS
Stocks:
European shares were lower while oil prices continued to rise as Middle East supply concerns remain elevated.
European oil stocks were mixed at the open despite oil posting gains as traders assessed the impact of lost Saudi Arabian volumes after the attack on the country's East-West pipeline.
High oil prices increase inflation concerns and prompt speculation that central banks around the globe will need to raise interest rates. The Federal Reserve is now widely expected to hike rates on Wednesday, following on from the European Central Bank's 25-basis-point rate increase last week.
Meanwhile, the selloff in global bonds gained traction on Tuesday, pushing the 10-year Treasury yield to its highest level since 2007 after it rose above 5% for the first time in almost three years on Monday.
U.S. Markets:
Stock futures were down Tuesday as investors focused on the Fed's decision on Wednesday.
Forex:
The euro fell. The currency could fall against the dollar if the Fed raises interest rates on Wednesday and signals the prospect of further tightening, ING said.
The dollar rose as investors anticipated the Fed will increase interest rates amid elevated oil prices and strong inflation and jobs data.
Sterling fell after data showed continued signs of softness in the U.K. labor market ahead of Thursday's Bank of England interest-rate decision.
Bonds:
Eurozone government bond yields rose slightly but remained below Monday's multiyear highs.
Treasury yields rose across maturities in Asian trade after the 10-year yield rose above 5% for the first time since October 2023 on Monday.
Energy:
Brent rose 1.75% while WTI was up 1.8%. Prices remained below Monday's intraday highs.
Gas
European natural gas prices remained well supported, with the Dutch TTF contract trading down 0.3% at 82.265 euros a megawatt-hour. Prices show little prospect of falling further as escalation in the Middle East dents chances of an imminent pickup in LNG flows from the Persian Gulf, ING said.
Metals:
Gold futures were down 0.5% at $4,331.20 a troy ounce in morning European trade. The fall comes as higher energy prices reinforce expectations that the Fed will begin raising rates, ANZ said.
Iron ore
Iron ore futures were lower in Asian trade. Demand for iron ore remains weak in China, while supplies are still high, Baocheng Futures said.
EMEA HEADLINES
AXA Targets More Growth With New Targets
AXA said earnings should keep growing over the next few years as the French insurer intends to gain market share after years of reorganization.
The new growth plan, which includes targets for 2027-29, builds on the repositioning the company has carried out in recent years to create a simpler organization, it said Tuesday.
U.K. Labor Market Remains Soft as BOE Rate Decision Looms
U.K. unemployment remained close to a five-year high in the three months through July, with the labor market showing continued signs of softness ahead of a Bank of England meeting this week.
The unemployment rate was 4.9%, unchanged from the three months through June, according to data released Tuesday by the Office for National Statistics. This was in line with a consensus of economists polled by The Wall Street Journal.
Oil Executives Say the Great Fuel Crisis Is Here
American oil executives warned for months that the prolonged closure of the Strait of Hormuz was bound to cause a fuel crisis. Now, they say it is here.
Commercial fuel stocks around the world have been depleting for more than six months, and strategic crude reserves can't be tapped much further. Attacks last week shut down a crucial crude pipeline in Saudi Arabia that bypassed the Strait, stranding at least 2.5 million barrels a day from an already tight global oil market, analysts estimate.
Saudi Arabia may be just days away from not being able to export much oil
Saudi Arabia, a top oil exporter to the world, may be days away from not being able to export much crude, intensifying pressure on global energy markets with the northern hemisphere's winter and harvest season just around the corner.
The kingdom said on Friday that it shut down its East-West pipeline, which had emerged as a crucial conduit to sidestep the Strait of Hormuz chokepoint, itself severely curtailed with the U.S. and Israel's war with Iran. Saudi Arabia has not yet offered a timeline for repairs, which could be lengthy.
GLOBAL NEWS
Oil Prices Rise as Middle East Supply Concerns Persist
Oil prices rose in early European trading Tuesday as the shutdown of Saudi Arabia's East-West Pipeline and recent territorial gains by Houthi militants in Yemen kept concerns over Middle East crude supplies elevated.
Brent crude futures rose 1.8% to $107.59 a barrel, while West Texas Intermediate gained 1.9% to $103.30 a barrel. Prices remained below Monday's intraday highs, when Brent briefly reached $109.80 a barrel and WTI touched $104.35 before paring gains. Brent ultimately settled at $105.68, while WTI settled at $101.39
U.S. 10-Year Treasury Yield Rises to Highest Since 2007
The selloff in global bonds gained traction on Tuesday, pushing the 10-year U.S. Treasury yield to its highest level since 2007 after it rose above 5% for the first time in almost three years on Monday.
The 10-year Treasury yield hit a high of 5.041%, Tradeweb data showed, as heightened tensions in the Middle East fueled concerns over energy prices and inflation, leaving a 25-basis-point Federal Reserve rate hike on Wednesday looking close to certain.
AI Leaders Are Calling for a Slowdown, but Wall Street Keeps on Buying
Wall Street's AI train is still steaming ahead, even after the technology's leaders called for a slowdown.
A week of alarming headlines about AI's potential to destroy civilization culminated Saturday with Anthropic's Dario Amodei, OpenAI's Sam Altman, Elon Musk of xAI and Demis Hassabis of Google's DeepMind each affirming the need to curb development of the technology.
The Lightning Offensive That Saw the Houthis Grab a Crucial Oil Corridor
DUBAI-After sitting out months of the Iran war, Yemen's Tehran-backed Houthi rebels seized a crucial maritime chokepoint in a lightning offensive over the weekend that further imperiled global energy supplies and injected the group into any effort to resolve the conflict.
It is an unusually prominent position for the group's warlord leader, Abdulmalik Al-Houthi, who claims descent from the Prophet Muhammad and rules his impoverished territory through fear and religious fervor. But it is one that reflects both the growing ambition of his 350,000-strong militant army and its prowess with military tactics, missiles and drones.
Supreme Court Blocks Trump's New Mail Ballot Requirements for Midterms
WASHINGTON-The Supreme Court on Monday blocked the Trump administration from imposing new requirements for mail ballots, averting what state and local officials warned would have been a crisis in the midterm elections.
In an unsigned one-paragraph ruling, over the dissent of two conservative justices, the court said the U.S. Postal Service can't enforce new rules that would have compelled states to quickly redesign their ballot envelopes, submit lists of voters to the federal government and get signoff from postal officials before ballots could be mailed to voters.
The Gulf's AI Nightmare Came Courtesy of an Iranian Drone
DUBAI-The day after the U.S. and Israel launched their opening strikes on Iran, the Islamic Republic shot back with swarms of drones aimed at the Gulf's newest high-value targets: American data centers.
More than six months after the barrage, a damaged Amazon Web Services facility in Abu Dhabi and another one in Bahrain are still mostly offline. The company has told clients to move their data to other regions while it repairs the sites and hasn't given a date for completing the work.
Oil Executives Say the Great Fuel Crisis Is Here
American oil executives warned for months that the prolonged closure of the Strait of Hormuz was bound to cause a fuel crisis. Now, they say it is here.
Commercial fuel stocks around the world have been depleting for more than six months, and strategic crude reserves can't be tapped much further. Attacks last week shut down a crucial crude pipeline in Saudi Arabia that bypassed the Strait, stranding at least 2.5 million barrels a day from an already tight global oil market, analysts estimate.
Write to priscila.barrera@wsj.com
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