Oil Surge Pressures US Stocks as Markets Await Inflation Data

Market Wrap-up: Oil Nears $100, US Stocks Retreat 

While awaiting key US inflation data, markets turned their attention back to developments in the Middle East, where renewed tensions involving the US and Iran contributed to a sharp rise in oil prices during after-hours trading.

Brent crude rose around 2% to $99.05 per barrel after closing at $97.92 on 8 September. US WTI crude gained 2.8% to $94.04 per barrel, compared with its previous close of $93.03.

US officials said that Iran had attempted to attack US Navy vessels on 7 September, following reports that a US aircraft carrier had been targeted with ballistic missiles over the weekend. In response, the US struck several Iranian oil tankers near Kharg Island, a major crude oil export hub, adding to concerns about potential further disruptions to global oil supplies.

Oil prices have now gained more than 8% so far in September amid renewed military tensions between the US and Iran. Developments widened this week after Iran-aligned forces in Yemen attacked several energy facilities in Saudi Arabia, leading to the suspension of some operations.

On 7 September, Goldman Sachs raised its December 2026 price forecasts for Brent and WTI crude by $5 to $85 and $80 per barrel, respectively. The bank also expects disruptions to shipping activity in the Middle East to continue into 2027. 

Higher oil prices also coincided with declines across US equity markets. The Dow Jones Industrial Average fell 628.18 points, or 1.18%, to 52,786.07. The S&P 500 declined 0.58% to 7,673.52, while the Nasdaq Composite fell 0.32% to 26,421.41.

The rise in energy prices has also brought greater attention to US inflation data due later this week. The figures are expected to be an important factor in shaping monetary policy expectations ahead of the Federal Reserve's meeting next week.

Meanwhile, traders were also assessing fresh trade developments between the US and Canada. Canadian tariffs on approximately $20 billion worth of US goods officially took effect on 8 September.

The DXY, which measures the strength of the US dollar against a basket of major currencies, remained broadly unchanged around 98.82, close to Tuesday's opening level. The Canadian dollar strengthened alongside higher oil prices, with USD/CAD falling 0.25% to around 1.3780.

Meanwhile, the Japanese yen continued to strengthen ahead of the Bank of Japan's policy meeting. Growing expectations that the BOJ may continue raising interest rates have increased market attention on the potential unwinding of carry trades, a strategy that involves borrowing in low-yielding currencies such as the yen to invest in higher-yielding assets.

Gold trading remained subdued, with spot gold falling 0.4% to $4,385.85 per ounce after reaching an intraday high of $4,442.70.

Looking ahead to today, markets will await the release of the ADP weekly employment change report, which was delayed by one day. Investors will also closely monitor remarks from ECB President Christine Lagarde ahead of Thursday's interest rate decision.

DXY:

Key takeaway:

DXY was broadly unchanged around 98.82 as markets assessed fresh geopolitical developments and awaited key US data.Upcoming inflation and labour market readings remain important for interest rate expectations ahead of the Fed meeting next week.Technical Outlook:

Daily Bias: BearishSupport: 98.55   Resistance: 99.00    

Gold:

Key takeaway:

Gold edged lower after reaching an intraday high of around $4,442 per ounce.Markets turned more cautious, leaving gold without a clear directional catalyst.Technical Outlook:

Daily Bias: Bearish with Rebound PotentialSupport: 4,341Resistance: 4,413 

Oil:

Key takeaway:

Oil prices moved higher as renewed developments involving the US and Iran added to uncertainty around regional oil flows.Goldman Sachs expects disruptions to shipping activity in the Middle East to extend into 2027.Technical Outlook:

Daily Bias: BullishSupport: 91.80 Resistance: 96.00  

USD/CAD:

Key takeaway:

The Canadian dollar strengthened alongside higher oil prices.New US-Canada trade measures remain an additional consideration for the currency outlook.Technical Outlook:

Daily Bias: BearishSupport: 1.37600 Resistance: 1.37940   

Calendar Watch:

ADP Weekly Employment Change: Markets will assess the latest signal on US labour market conditions.Christine Lagarde Speech: Investors will look for clues ahead of Thursday's ECB policy decision. 

Whether you are new to the markets or an experienced trader, stay connected to global markets with CPT Markets.  

Access our trading platforms across multiple devices, with competitive spreads and fast execution. 

This content is provided for informational purposes only and does not constitute investment advice, investment recommendations, or an offer or solicitation to buy or sell any financial instrument. Trading financial products such as Forex and CFDs involves a high level of risk and may not be suitable for all investors. You may lose all of your invested capital, and in certain circumstances, losses may exceed your initial deposit. Please ensure that you fully understand the risks involved and carefully consider your financial objectives, level of experience, and financial situation before trading.