Global stocks slide as Brent crude surpasses $100 a barrel

Global stocks have come under pressure and Brent crude oil surpassed $100 a barrel as escalating fighting throughout the Middle East stokes fears of energy-driven inflation.

Key points

• Manish Kabra, a multi-asset strategist at Societe Generale, remarked $100 was a "psychological threshold" rather than an economic one.
• US Secretary of State Marco Rubio remarked Washington would keep hitting Iranian oil tankers in response to attempted attacks on US warships.
• The US military attacked five Iranian crude oil carriers overnight, with Iran retaliating with missile attacks on US forces in Jordan and attacks on shipping.
• Wall Street's three main stock indexes – the S&P, Dow and Nasdaq – each saw small losses.
• Ipek Ozkardeskaya, a senior analyst at Swissquote, informed Reuters that risk appetite remained fragile due to rising oil rates from the war.

When a memorandum of understanding between the United States and Iran was in place, and its cost was on the downswing, the benchmark crude contract rose to $100.19 on Wednesday, its highest level since July 24.

For context, the US military attacked five Iranian crude oil carriers overnight, with Iran retaliating with missile attacks on US forces in Jordan and attacks on shipping.

Wall Street's three main stock indexes – the S&P, Dow and Nasdaq – each saw small losses. European stocks dropped to one-week lows, with industrial and banking stocks hit the worst. Canada's blue-chip stock futures additionally inched down.

Although technology shares continued to climb back from a July low, driven by the artificial intelligence boom, asian markets fluctuated.

"Summer was full of hope that a peace agreement could be achieved, " he remarked. "This optimism is fading as we enter September."

"We think crude needs to hit $150 to create a major drawback in demand cycle, " he remarked. Rising diesel rates could feed into inflation and services, he went on.

Notably, the surge in oil rates has went on to reservations that higher inflation will lead central banks to adopt more restrained monetary policies.

In practice, the European Central Bank is projected to hike interest rates on Thursday, and next week the US Federal Reserve will meet to determine whether they will do the same.

Bond markets are feeling the strain as well. Inflation reservations have raised yields in recent weeks as traders anticipate central bank tightening.

Since the US and Iran resumed attacks on each other at the end of August, benchmark bonds in the US, Japan and some European countries have seen multidecade-high yields, raising reservations over administration borrowing costs and the health of global financial institutions.

Taken together, the developments around global stocks slide as Brent crude surpasses $100 a barrel point to a situation that is still moving, and the coming days should bring more clarity.