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Stocks hit by rising inflation, geopolitical uncertainty and oil prices
Investors were on edge Monday as rising oil prices, the conflict in the Middle East, and political unrest in Europe kept them on edge. Stocks fell on Monday ahead of important U.S. inflation data this week. Tehran announced that it would 'announce a limited zone outside the Strait of Hormuz within the next few days,? after U.S. forces struck three Iranian tankers. Iran's Islamic Revolutionary Guard Corps fired ballistic missiles on two U.S. Navy vessels. Brent crude futures have risen 0.6%, to $97 per barrel, the highest in seven weeks. Oil prices rose almost 8% in the past week, and are now 35% higher than they were at the end of February before war began. Diesel prices, which power transport, shipping and farming, as well as manufacturing, reached record highs in the last week. They are now around 90% higher than before the war. Investors should pay close attention to this week's U.S. Consumer Price Index because central banks will likely raise interest rates as food and fuel prices are on the rise. The European Central Bank will likely raise rates to 2.75 percent on Thursday. Futures indicate a 75% probability of a second hike to 3.0% in December. Markets are also pricing in 75% of the possibility that Bank of Japan will increase rates by a quarter point during its September 18 meeting, with 60% of a second move expected before December. Bruce Kasman is the global head of economics at JPMorgan. He said that the patience of central banks during the energy crisis has helped asset prices and credit cycles. "However central banks are now moving." RATE INCREASES? The Federal Reserve's last-week's payroll report, which exceeded expectations by a whopping?162,000, left the markets pricing in a 58% chance of an increase when they meet on September 16 and a 70% chance of one in October. The euro was a little stronger today around $1.1625, as an ECB rate hike is all but a done deal. Analysts said that the euro has been drifting lower since August's three-month highs. With political tensions increasing on many fronts, it may be hard to gain much upward momentum. The Alternative for Germany (AfD), a far right party in Germany, won the state elections in Saxony Anhalt on Sunday. This is the first time in history that a far right party has been able to win power at the state level. The AfD, while still far from a majority and gaining power at the national level, has stated that one of their policies is to abandon the euro. Kathleen Brooks, XTB's research director, said: "This development is harmful for the long-term stability of a single currency." Recent polls in France show that far-right leader 'Marine Le Pen', who has previously supported abandoning the Euro, is likely to win the first round at next year’s presidential elections. The next few years may see a wave of political change in Europe, and a shift towards the right for the two biggest economies. It may not be an issue for FX traders now, but tomorrow it will be. This could explain why the euro is among the weakest currencies in comparison to its peers by 2026, Brooks stated. The euro fell 1.1% this year, making it one of the worst performing major currencies against the dollar. This is compared to a modest 0.7% increase in the Japanese yen which was partly boosted through official intervention and a 0.4% gain in the pound. Dollar?retreated? against the yen as buying sparked a surge of yen to a 7-month high. Last week, the yen posted its best weekly performance in over a month, due to the rising expectations that the BOJ will raise rates and the threat of additional official buying. While European stocks were down about 0.1%, Wall Street was a little quieter due to a U.S. Holiday. S&P futures were down by 0.1% while Nasdaq Futures rose 0.1%.
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Russia's EV sales are expected to double this summer, as drivers face fuel shortages
Data from the analytical agency Autostat revealed that new electric vehicle sales in Russia have more than doubled during the summer months as shortages caused a result of Ukrainian attacks on refineries, boosted demand for alternatives to cars powered by combustion engines. The data provided showed that sales of new plug-in or electric hybrid passenger cars were mainly manufactured in China. They reached 26,543 units from June to August of this year. This is up from 12,187 units during the same period in 2025. Kyiv's attacks on major Russian refineries intensified in early June. They forced some to stop operations and contributed to fuel shortages. By the end of August, Russia's gasoline production was only 70% of its domestic consumption. Russian motorists were forced to queue for hours at gas stations and search for fuel. Some consumers decided to switch to electric vehicles or convert their vehicles to natural gases. The EV market in Russia is still'relatively small,' mainly because of the limited charging infrastructure, long distances and harsh climate. Autostat reported that EVs and hybrids made up just 4.3% last year of Russia's overall car sales. Autostat said that EV sales had been 'constrained by a lack of supply' as manufacturers and importers were surprised by the gasoline shortages.
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French wine production at 30-year lows following heatwaves
The French wine production will likely be the worst in 30 years. Champagne's output is expected to drop by half from 2025 due to shrinking vineyards, severe heat and drought, and vines and grapes being damaged. The world's second largest producer, after Italy, projected a production of 33.9 million hectolitres in its first estimate. This is 6% less than last year's average and 17% lower than the 2021-2025 period. The hectolitre equals 100 litres, or 133 standard bottles of wine. After a poor wine harvest in 2024, this would be the third consecutive year that France has had a low-production wine crop. The ministry stated that although spring conditions initially supported a more favorable harvest outlook, heatwaves and summer droughts have damaged vines and decreased yields. Champagne's output is predicted to be down 49% on 2025 and 47% below its five-year average. Bourgogne-Beaujolais is expected to decline by a third, Val de Loire by 12%, and Charentes by 6 %. Languedoc-Roussillon, France's largest producing basin, should rise 5% from last year's weak harvest thanks to better yields, though output remains below average. Bordeaux's production is expected to rise 10% by 2025, after the late-August rains helped alleviate drought stress. However, it remains below its 5-year average. The ministry reported that most wine producers in France,?as well as other European countries, started picking grapes early this year due to?extreme temperatures. France has traditionally been the largest exporter in terms of value. This year, the production area decreased by 2.5%. In the past, winemakers have been forced to remove a part of their vineyards due to an oversupply and a decline in wine consumption. The French agriculture sector has been severely affected by the record heatwaves this summer, which have destroyed crops, pastures, and water supplies. France announced on Friday an emergency assistance package for farmers worth more than EUR1 Billion ($1.16 Billion).
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Climate change is causing Europe's crops to mature earlier, according to data
Data shows that maize, rapeseed, and winter wheat were harvested much earlier in Europe in 2026 compared to the turn of century. Winter wheat reached maturity 20 days earlier in certain parts of the European Union, according to data from the European Commission. Similar intervals were observed for rapeseed or corn. "In the past 20 years, we have always been fully involved in the maize crop around September 14, 15, or 16. Hermann Greif is the district president of the Upper Franconia Bavarian Farmers' Union. Typically, crops are harvested between 10 and 20 days after maturity. However, this can vary greatly by crop, year, country, etc. The same is true for cereals. In the past we would usually harvest wheat in the second week of august, between August 10 to 15. Greif stated that we now harvest wheat as early as 'July in the last days of month. Europe, the fastest-warming continent in the world, experienced several heatwaves from as early as May 2026. This accelerated crop maturation. Sebastien Poncelet is a senior analyst with Argus. He said that the development of plants is largely determined the amount of heat units needed to progress from one physiological phase to another and eventually reach maturity. He added that as temperatures rise, even by a few degrees at a time, plants accumulate heat units faster, which speeds up their growth cycle, resulting in an earlier harvest and maturity date. AFFECTED BY QUALITY AND Quantity The quantity of crops harvested was negatively affected by drought and heat. FranceAgriMer, the French farm office, estimated that as of Friday only 27% of the grain maize crop was in excellent or good condition. This is the lowest score since 2011. Greif added that "some crops whose critical stages of growth coincide with summer and spring droughts can face significant challenges." These crops could face significant yield reductions when drought strikes while they are still requiring water. France's Agriculture Ministry forecast a 35% decrease in grain maize output compared to the previous year. Analysts expect production to plummet by about half, to its lowest level ever.
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China's central banks continues to increase gold purchases in August
China's central banks increased its gold -purchases in August for the sixth consecutive month. This is the highest amount of bullion added to their?reserves? since October 2023. Gold holdings of the People's Bank of China rose from 76.08 to 76.73 millions fine troy-ounces by the end of August. The 650,000 ounce addition was slightly higher than the 640,000 added in July, and it is the largest monthly increase since October 20, 2023 when holdings increased by 740,000 pounds. Since March, when central?bank added 160,00 ounces of gold, the pace of 'purchases' has increased. In June, it added 480,000 ounces. China continues to accumulate gold despite the sharp rise in bullion price this year. China's gold reserves increased to $350.08 Billion at the end August, from $306.35 Billion a month before, according to the data. This was due both to new purchases and the sharp increase in gold prices. Gold gained 9.7% in August. This was its biggest monthly gain since January. Supported by a weaker Dollar, lower Treasury yields, and a safe-haven market. Prices were under pressure at the end of the month, after Federal Reserve Chair Kevin Warsh's hawkish remarks revived expectations of further U.S. rate increases. Spot gold was down around ?0.4% on Monday after stronger-than-expected ?U.S. jobs data boosted rate-hike expectations.
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State news agency reports that 11 people were killed in Israeli attacks on a southern Lebanese village
Lebanon's official news agency reported that Israeli airstrikes on a southern Lebanese city early Monday morning killed 11 people, including two children and two doctors. Israel has intensified its bombardment of south Lebanon over the past few days despite a ceasefire in June that was supposed to stop fighting between Israeli forces and Hezbollah, a Lebanese militant group. Israeli strikes killed at least seven people on Sunday. After midnight, Israeli planes struck a building housing a family in Kfar Rumman, southern Lebanon. Nine people, including two children were killed and five others injured, according to the National News Agency of Lebanon. Two medics were killed in a separate Israeli drone attack on a civilian vehicle, according to the report. The Israeli military did not issue an online warning of evacuation prior to the strikes in 'the town. The Israeli military did not respond immediately to questions about the strikes. This included whether they were aware that there were medics and children present at the strike sites and why an evacuation warning had not been issued. Israeli military spokesperson issued an evacuation warning shortly after 2:00 am local time on Sunday (2300 GMT) for the area around a building located in another southern Lebanon town where they'said that it would strike Hezbollah installations. Since Hezbollah fired rockets on Israel on 2 March -- two days following the U.S.-Israeli strikes against Iran -- Israeli air and ground strikes have killed more than 4,300 people. Violence decreased dramatically after the ceasefire, but Israeli troops in southern Lebanon continued to raze villages within their self-declared zone of security. Israel's military has continued to carry out strikes within the security zone as well as in its northern part, most often without warning.
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TotalEnergies nears Papua LNG investment decision after cost cuts, Exxon deal
TotalEnergies announced on Monday that it had cleared a number of?commercial and contractual hurdles in its Papua LNG Project, bringing the project closer to a decision. The French energy giant said that it had completed the tendering process for the engineering, procurement, and construction work of liquefied gas facilities. Contracts are now awaiting approval from its joint-venture partners. TotalEnergies reported that by rebidding?contracts and optimising project design, they have been able to save close to $4 billion in costs since 2024. This has brought down the capital spending?to?around $14 billion. ExxonMobil already operates the nearby PNG LNG plant. The company has handed over the project's operations to ExxonMobil. TotalEnergies is also selling a 9.1% stake to its partners, while retaining a 20 percent stake and keeping the LNG offtake share. The companies have also finalised a revised gas agreement with the Papua New Guinea government. They've set up a joint venture to market LNG with Kumul Petroleum, to sell 2.4 million metric tonnes per year (Mtpa), of the project's output of 5.6 Mtpa. TotalEnergies has also signed an offtake contract to access 1.5 Mtpa for its own portfolio. TotalEnergies' CEO Patrick Pouyanne stated in July that he aimed to make a final decision on investment by November.
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The real enemy of US inflation is diesel, says MORNING BID EUROPE
Wayne Cole gives us a look at what the future holds for European and global markets. The week has started with a mixed bag. While European and Wall Street futures barely moved, Asian shares were led higher by tech. Semiconductor stocks helped the Nikkei rise by 2%, and?South Korea?s Kospi rose around 3% to 6,900. Goldman Sachs has predicted a 75% increase in the Kospi, but this is a call that's been made for years. The fact that the U.S. has a holiday on Monday might make it easier to buy tech shares without fear of Wall Street crashing everything. The AI craze has also distracted from the deadlock that is?the Gulf, where Tehran announced it would announce a restricted area outside the Strait of Hormuz within the next few days after U.S.?forces struck three Iranian tankers. Iran's Islamic Revolutionary Guard Corps fired ballistic missiles on two U.S. Navy vessels. Brent crude is up by 0.6% or so to $96.85 per barrel. U.S. crude has risen to $92.10. Diesel prices are not happy news, as they reached record highs in the last week. Diesel is the fuel most important for transportation, shipping, agriculture and manufacturing. The inflationary pulse is raising the stakes ahead of the U.S. CPI report for August, which will be released on Friday. Any?rise in core price inflation above 0.2% could put pressure on the Federal Reserve this month to raise rates. Fed funds futures have a 57% probability of a September rate hike, 70% for an October move and are fully priced for a December rate increase. Donald Trump would not welcome a high CPI. He threatened last week to stop trading with countries that have a surplus of trade with the United States if the Federal Reserve did not lower interest rates. But Europe is not immune to political problems. The far-right Alternative for Germany, or AfD, won the state elections held in Saxony-Anhalt, though they fell short of a majority. The Euro is not changing much at the moment, $1.1608. However, German?bunds may be under pressure if it looks like AfD will actually take power. As the ECB will most likely raise rates by 2.50% at its meeting on Thursday, the focus will be on the comments made about the possibility of a further tightening. Most analysts think this is the final hike in the cycle but the markets have already priced at least 2.75%. The dollar has remained flat at 156.21?yen after falling over 2% in the previous week, amid all of the?chatter about a possible more hawkish Bank of Japan. Market developments on Monday that may have a significant impact - EU Sentix Investor Confidence for September, final Q2 GDP & employment German industrial production for July UK house prices and BRC Retail Sales
Stocks rattled as inflation risks from rising oil and geopolitical uncertainty rise
Investors were on edge Monday as rising oil prices, the conflict in the Middle East, and political unrest in Europe heightened their anxiety. Stocks fell in anticipation of important?U.S. data. The inflation data will be released later this week.
Tehran announced that it would announce a restricted area outside the Strait of?Hormuz?in the coming days after U.S. Forces hit three Iranian tanks and Iran's Islamic Revolutionary Guard Corps fired ballistic missiles on two U.S. Navy vessels.
Brent crude futures have risen by nearly 1.5%, to $97.6 per barrel. This is the highest in seven weeks. Last week, the oil price jumped almost 8% and is now 35 percent higher than it was at the end of February before war began.
Diesel prices, which power transport, shipping and farming, as well as manufacturing, reached record highs in the last week. They are now around 90% higher than before the war.
Investors should pay close attention to this week's U.S. Consumer Price Index because central banks will likely raise interest rates as?food prices and fuel prices are rising across the globe.
On Thursday, the?European Central Bank will likely raise rates to 2.75%. Futures indicate a 75% probability of a second hike to 3.0% in December.
Markets are also pricing in that 75% of the time, the Bank of Japan will increase rates by a quarter-point at its September 18 meeting. A 60% chance of another rate hike is expected to occur before December.
Bruce Kasman is the global head of JPMorgan's economics. He said that the patience of central banks during the energy crisis has helped asset prices and credit cycles. "However central banks are now moving."
RATE INCREASES?
The Federal Reserve's last-week payroll report, which blew away expectations by averaging 162,000 more employees than expected in August, left the markets pricing in a 58% likelihood of an increase when they meet on September 16. And a 70% chance for a change in October.
The euro was trading flat around $1.1614, with an ECB rate hike almost certain. Analysts said that the euro has been drifting lower since August's three-month highs and with increasing political tension on many fronts, it may struggle to gain much upward momentum.
The Alternative for Germany (AfD), a far right party in Germany, won the state elections in Saxony Anhalt on Sunday. This is the first time in history that a party of this extreme right has been able to reach the state level. The AfD, while still far from having a majority or gaining power at the national level, has stated that one of their policies is to abandon the euro.
Kathleen Brooks, XTB Research's Director of Research, said: "This development is harmful for the long-term stability of the euro currency."
Recent polls in France show that Marine Le Pen of the far right, who has previously advocated the abandonment of the euro, is likely to win the first round?of the presidential elections next year.
The next few years may see a political shift in Europe, and in the two biggest economies. It may not be an issue for FX traders today, but tomorrow it will be. This could explain why the Euro is among the weakest currencies in comparison to its peers by 2026, Brooks stated.
The euro fell 1.1% against the dollar this year. It is the worst performing major currency. This compares to a modest 0.7% increase in the Japanese yen (which was boosted in part by government intervention) and a 0.4% rise in the pound.
The dollar fell 0.3% against the yen to 155.76. The Japanese currency had its best weekly performance for a month in the past week as rising expectations of the BOJ raising rates and the threat of additional official buying caused a short-squeeze.
While European stocks were down 0.3%, Wall Street was a little quieter due to a U.S. Holiday. S&P futures fell by 0.1%, and Nasdaq Futures rose 0.3%.
(source: Reuters)