Stocks dip, Treasury yields jump as oil pushes higher

2026-03-11 - 23:04

Markets showed that traders believed the likelihood was rising for most central banks to hike interest rates next. (EPA Images pic) NEW YORK: Global shares fell and benchmark Treasury yields spiked on Wednesday after data showed US inflation picked up as expected while oil prices resumed their climb as the US-Israeli war on Iran dragged on. Data from the Labor Department showed the consumer price index rose 0.3% in February, in line with forecasts and above January’s 0.2% increase. The CPI rose 2.4% in the year to February while the core rate, which excludes food and energy prices, rose 2.5%, both in line with forecasts. Wall Street’s main stock indexes finished flat to lower. The Dow Jones Industrial Average fell about 0.6%, while the S&P 500 and the Nasdaq Composite were little changed. The consumer price report did not capture the steep rise in gasoline and other items since the outbreak of war in the Middle East 12 days ago. Markets already show traders believe there is a rising chance that most central banks’ next move on interest rates will be to hike. “February’s inflation numbers were heading in the right direction, but then along came the conflict in the Middle East and now the path is changing. Instead of deflation from energy, we will get inflation. Food prices could show signs of inflation acceleration as the fertiliser market is in chaos,” Annex Wealth Management chief economist Brian Jacobsen said. Oil prices settled up nearly 5% on Wednesday on supply disruption fears, and analysts said the International Energy Agency’s proposal for a record release of oil reserves is inadequate to ease those worries. Brent futures rose US$4.18, or 4.8%, to settle at US$91.98 a barrel, while US West Texas Intermediate ended the session up US$3.80, or 4.6%, at US$87.25 a barrel. The MSCI All-World index fell about 0.2% and European shares slid, leaving the STOXX 600 down 0.6%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1% higher. Investors remain on edge as the Middle East conflict threatens to freeze global energy trade and ignite a price shock – a risk that world leaders are scrambling to address. The immediate concern is when the Strait of Hormuz, a critical artery for 20% of global fuel supply, will again be safe for traffic as threats to vessels have deterred ships from entering it since the outbreak of the conflict. Three more vessels have been struck by projectiles, while Iran’s military command said on Wednesday that the world should be prepared for oil to hit US$200 a barrel. European Central Bank president Christine Lagarde said on Tuesday the ECB would do everything to keep inflation under control and to avoid a repeat of the 2022 energy price shock. The euro fell around 0.34% to US$1.157, while the pound was little changed on the day at US$1.341. The yen weakened further, leaving the dollar up 0.6% at 158.9. Bond yield surge adds to overheating concerns US Treasuries fell again on Wednesday, pushing the yield on the benchmark 10-year note up 9 basis points to 4.226%. The surge in bond yields this week, due to fears of sustained energy-price pressures, has added to concerns over other market segments being at risk of overheating, such as private credit and the vast investments in AI projects. Investors were also reminded of vulnerabilities within private credit after a person close to JPMorgan Chase said on Wednesday the bank had marked down the value of some loans held by private-credit groups and was tightening lending to the sector. Publicly traded asset managers such as Blue Owl Capital and Ares Management lost ground on Wednesday as jitters were felt across the financial sector.