Wall Street Hits Records as Houthi Attacks Lift Oil

Summary

Wall Street indexes hit record highs on earnings optimism, but the mood faded in Asia as oil climbed after Houthi attacks on Saudi Arabia. French bonds and the euro rallied after Marine Le Pen outlined spending cuts. Treasuries rebounded on a solid 3-year auction, while odds of an October Fed hike fell to about 20%. European stock futures pointed lower, with the FTSE set for a softer open.

Equities

The FTSE 100 closed 0.4% higher at 24,215.33 on Tuesday, while the FTSE 250 also gained 0.4%. Softer oil prices and lower gilt yields supported the UK market after last week’s bond-market volatility, although defence stocks fell.

Brent crude declined 2% on Tuesday as resilient Middle Eastern exports and a G7 agreement to release emergency stockpiles eased supply concerns. BAE Systems, Babcock International and Rolls-Royce fell between 2% and 4% after reports that the UK government could delay plans to set out a path towards increasing defence spending to 3% of GDP.

Informa rose 3% on Tuesday after the exhibitions group agreed to buy events organiser Clarion for £2.24 billion and said it would spin off its Taylor & Francis academic publishing division. Clarkson gained 2.2% after forecasting annual underlying pretax profit above market expectations.

ASOS fell 9.6% on Tuesday after reports that customers had received push notifications saying the online fashion retailer had been hacked and threatening to leak information. The company said basic personal information might have been accessed, although it did not believe payment-card information or account passwords had been affected.

In the US, the S&P 500 rose 0.58% to 7,818.95 on Tuesday, while the Nasdaq gained 0.45% to 27,599.79 and the Dow added 0.49% to 51,521.04. The S&P 500 and Nasdaq both reached record closing highs as investors turned towards the upcoming third-quarter earnings season.

Marvell Technology climbed 5.8% on Tuesday after raising its 2028 revenue forecast on strong demand for data-centre chips. AMD gained 2.8% after CEO Lisa Su said the company planned to substantially increase chip supply in 2027 to meet strong AI demand.

Constellation Energy jumped 12.3% on Tuesday after Alphabet agreed a 3,590-megawatt power deal with the company. Option Care Health soared 32.7% after McKesson and Clayton Dubilier & Rice agreed to buy the infusion therapy provider in a deal worth about $5.8 billion including debt.

The US trade deficit widened 13.7% in August as imports reached a record high, while markets priced a 19.4% probability of a second consecutive Federal Reserve rate hike this month, down from 50.9% a week earlier.

Forex & Commodities

The US dollar recovered early this morning after falling late on Tuesday, with the dollar index up to 102.07. The euro fell to $1.123, while the British pound fell to $1.324. The yen also weakened to 158.39 per dollar.

The Federal Reserve’s September meeting minutes are due later today, with investors looking for further clues on the timing of interest-rate increases. Expectations for an October hike have fallen to 20.5%, from about 51% a week ago, while markets still price an 84.5% chance of a December increase. Fed officials Christopher Waller, Neel Kashkari and Alberto Musalem are also due to speak later today.

The yen weakened early this morning despite new Bank of Japan policymaker Ayano Sato saying she supports raising interest rates in several stages. The BOJ could also signal this month that underlying inflation has reached its 2% target, strengthening the case for further increases.

Spot gold fell to $4,138 early this morning as the stronger dollar weighed on prices. Investors are awaiting the Fed minutes for further indications of the central bank’s rate path, while recent softer US economic data has reduced expectations of an October increase.

Oil prices rose early this morning, with Brent up to $101.6 a barrel and WTI at $90.24. A storm heading towards US Gulf production and refining areas raised concerns about supply disruptions, while attacks by Yemen’s Houthis on Saudi targets added to Middle East supply risks.