Stock markets worldwide experienced declines during early trading Tuesday, driven primarily by escalating geopolitical tensions in the Middle East. A series of Houthi attacks targeting oil facilities and utilities in Saudi Arabia’s southern region intensified conflict between the U.S. ally and Iranian-backed rebel forces in Yemen, prompting investor concerns about potential supply disruptions and sustained energy price pressure.
European markets opened lower, with Germany’s DAX dropping 0.3% to 25,922.44 and France’s CAC 40 declining 0.2% to 8,291.43, while London’s FTSE 100 remained relatively stable. Futures markets in the United States reflected the cautious sentiment, with the S&P 500 futures down 0.2% and Dow Jones futures falling 0.7%. Asian markets showed broader weakness, particularly in Japan where the Nikkei 225 lost 1.7% to 65,269.33 as major exporters faced selling pressure amid a strengthening yen. Toyota Motor Corp. shares dropped 4.1% and Panasonic Holdings fell 5.8%.
The yen’s appreciation against the U.S. dollar to 153.86 from 154.34 reflected market expectations that U.S. and Japanese authorities might intervene to support the currency. Economic data from Japan showed the nation’s economy expanded at a 1.4% annualized rate during the April-June quarter, exceeding preliminary estimates of 1.1%, though overall investment remained negative at minus 0.9%. Chinese export performance stood out positively, with shipments jumping 25% year-on-year in August driven by vehicle and technology demand.
Energy markets responded sharply to the geopolitical developments. Brent crude gained 1.5% to $98.48 per barrel while U.S. benchmark crude surged 2.5% to $93.79 per barrel. Investors awaited significant U.S. inflation data later in the week, with the Producer Price Index scheduled for Thursday and the Consumer Price Index report set for Friday, both expected to provide crucial insights into pricing pressures throughout the economy.
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