Oil Spike, Hot CPI: Fed Hike Odds Surge

For the week of Sep 11, global markets sold off as an escalating Middle East conflict pushed oil briefly above $100 a barrel and a hotter-than-expected August core CPI reading lifted the odds of a September Fed rate hike. U.S. equities retreated broadly, led by small- and mid-caps, as rising Treasury yields and fuel costs weighed on sentiment ahead of the Fed's policy decision. China and Hong Kong shares fell in sympathy, with Hong Kong underperforming the mainland as AI-related tech names swung sharply on dilution concerns. Singapore's Straits Times Index also retreated, tracking the regional risk-off tone as banks and property counters led the decline.

(Refer to the major indices' weekly performance tables below.)

🇺🇸 United States

Market Overview

U.S. equities finished the holiday-shortened week broadly lower as an escalating Middle East conflict sent oil prices sharply higher and lifted Treasury yields. The Dow Jones Industrial Average (DJI) fell 1.57%, the S&P 500 (SPX) declined 0.80%, and the Nasdaq Composite (COMP) held up best with a 0.66% loss, as small- and mid-cap names underperformed the mega-cap-heavy benchmarks. Markets were closed Monday for Labor Day, compressing a week dominated by inflation data and rate-hike repricing.

Index Weekly Performance

-  Dow Jones Industrial Average (DJI): -1.57%

-  S&P 500 (SPX): -0.80%

-  Nasdaq Composite (COMP): -0.66%

Key Highlights and Outlook

1️⃣ Middle East Conflict Sends Oil Near $110 

Attacks on Saudi energy infrastructure and continued U.S.-Iran hostilities lifted oil sharply, with WTI briefly topping $100 a barrel and Brent nearing $110 before easing late in the week. The spike revived inflation concerns just as the Fed prepared to weigh its next move, adding a fresh supply-side complication to an already delicate policy backdrop.

2️⃣ Core CPI Reaccelerates, Fed Bets Jump 

August core CPI rose 0.3% month-over-month, the fastest pace since April, while headline inflation held at 3.4% year-over-year. Wireless, airfare and software costs drove the upside surprise. The market-implied probability of a September rate hike climbed to roughly 87-90% by Friday, up sharply from earlier in the week.

3️⃣ Producer Prices Firm Ahead of CPI 

Producer prices rose 0.4% in August, accelerating from July's 0.1% gain and up 5.4% year-over-year, with energy costs driving much of the increase. Core PPI rose a softer 0.2% on the month but climbed to 4.6% annually, reinforcing the case that pipeline price pressures were building even before Friday's CPI print.

4️⃣ Treasury Yields Climb on Inflation, Supply 

The 10-year Treasury yield rose to roughly 4.97% and the two-year climbed above 4.63% as investors priced in firmer inflation and digested heavy issuance alongside a smaller-than-expected buyback operation. Rising yields added to the week's headwinds for equities, particularly rate-sensitive and higher-multiple sectors.

5️⃣ Consumer Sentiment Falls for Second Month 

The University of Michigan's preliminary September sentiment index dropped to 47.8 from 51.7, as resurgent fuel prices and trade tensions weighed on households' outlook. Year-ahead inflation expectations jumped to 4.6% from 4.0%, the highest reading since June, even as labor market data showed little sign of deterioration.

6️⃣ Earnings Strength Offsets Macro Headwinds 

Third-quarter S&P 500 earnings are tracking toward 27% year-over-year growth, extending a string of double-digit gains and helping cushion sentiment against rising yields and oil. Strategists note the Fed's current gap versus market rates looks narrower than in 2022, favouring a pairing of mega-cap tech leadership with select cyclical value exposure.

S&P 500 Sectors in Focus

Energy was the standout performer as the run-up in oil lifted producer names, with Communication Services and Technology also outperforming the broader market. Health Care and Materials lagged badly, while Real Estate, Consumer Staples, Financials, Utilities, Industrials and Consumer Discretionary all finished lower as rising yields pressured rate-sensitive groups. The narrow breadth of gainers against a broad list of decliners underscored how concentrated this week's pockets of strength were. 

(Refer to the SPX sector ETF weekly performance table below.)

Technical Snapshot

The S&P 500 and Nasdaq Composite pulled back toward near-term support after several weeks of gains, while the Dow's steeper decline reflected weaker breadth beneath the surface. Rising yields and oil prices added to short-term volatility ahead of the Fed's policy decision. All three benchmarks remain in sideways consolidation just below their recent highs, with a decisive break needed to confirm the next directional move.

📊 Weekly charts:

-  DJI weekly chart

-  SPX weekly chart

-  Nasdaq weekly chart

 

🇨🇳 China / Hong Kong

Market Overview

China and Hong Kong equities fell for the week, with Hong Kong underperforming the mainland. The CSI 300 declined 0.83%, the Shanghai Composite (SSE) fell 1.07%, and the Hang Seng Index (HSI) dropped 3.30% in local-currency terms, as elevated oil prices and rising U.S. Treasury yields weighed on regional risk appetite. Trading in China's AI-related tech names was especially volatile amid dilution concerns and intensifying price competition. (Refer to the major indices' weekly performance tables above.)

Index Weekly Performance

-  CSI 300: -0.83%

-  Shanghai Composite (SSE): -1.07%

-  Hang Seng Index (HSI): -3.30%

Key Highlights and Outlook

1️⃣ Beijing Broadens Bank Recapitalisation 

China announced RMB 360 billion (USD 54 billion) in fresh capital for eight state-owned banks, policy institutions and insurers, funded mainly through special Treasury bonds. Agricultural Bank of China and ICBC also announced A-share placements. Several large banks and insurers weakened as markets absorbed the dilution implications, even as the move aims to strengthen core capital buffers.

2️⃣ Exports Stay Resilient, Domestic Demand Uneven 

China's exports rose 25.0% year-over-year in August, accelerating from July, supported by strong tech shipments tied to the global AI build-out. Imports grew 28.2%, widening the trade surplus to USD 119.1 billion. Passenger-car retail sales fell 24% year-over-year, however, highlighting a still-uneven domestic recovery.

3️⃣ Inflation Picks Up on Energy, Upstream Costs 

Consumer price inflation rose to 0.8% year-over-year from 0.5%, while producer prices increased 3.8%, up from 3.5%, as energy and raw material costs climbed. Core inflation, excluding food and energy, held at a modest 1.0%, suggesting the pickup was driven more by input costs than a broad strengthening in domestic demand.

4️⃣ AI Names Swing on Dilution, Competition 

Several Hong Kong-listed AI model developers fell sharply this week on dilution concerns and intensifying price competition following a lower-cost model release from a domestic rival, even as Tencent-backed Enflame Technology surged roughly 179% on its STAR Market debut. The divergence underscored how selective sentiment toward China tech has become.

5️⃣ Maybank Flags Bank and Energy Picks 

Maybank favours China Merchants Bank for its strengthening wealth-management franchise and Ping An Insurance for improving business quality, both offering dividend yields of roughly 4-6%. It also likes CICC on robust capital-markets activity and CNOOC for its low-cost production base amid elevated oil prices, while flagging a possible near-term rotation toward dividend payers and defensives.

Technical Snapshot

The Hang Seng Index broke below its recent trading range as the 3.30% weekly decline extended a multi-week pullback from prior highs. Breadth was overwhelmingly negative, with decliners outnumbering gainers by a wide margin across the index. The index remains in a near-term downtrend, with a stabilisation in oil prices and Treasury yields likely needed before sentiment improves.

HSI Constituents — Weekly Gainers

Gains were far more limited and concentrated in utilities and telecoms. China Unicom led advancers, followed by CK Infrastructure, CLP Holdings and Power Assets, as investors rotated into defensive, dividend-paying names. 

(Refer to the Hang Seng Index constituents' weekly gainers table below.)

HSI Constituents — Weekly Decliners

Weekly decliners were led by consumer, tech and property counters as risk sentiment soured. Haidilao, WH Group and Zhongsheng each fell more than 10%, while heavyweights Alibaba, Tencent and BYD also declined sharply amid the broader tech-led sell-off. 

(Refer to the Hang Seng Index constituents' weekly decliners table below.)

📊 Weekly charts:

-  SSE weekly chart

-  HSI weekly chart

 

🇸🇬 Singapore

Market Overview

Singapore's Straits Times Index (STI) fell 1.83% for the week, tracking the broader regional sell-off as global risk appetite soured on rising oil prices and Treasury yields. Banking counters led the decline, with UOB, OCBC and DBS all down more than 1.7%, while property names and industrial REITs also came under pressure. A handful of defensive and shipping-related names bucked the trend.

Index Weekly Performance

-  Straits Times Index (STI): -1.83%

Key Highlights and Outlook

1️⃣ Banking Trio Leads Index Lower 

Singapore's three local banks were among the week's biggest drags on the STI, with DBS down 2.10%, OCBC off 2.08% and UOB down 1.79%, as rising U.S. Treasury yields and risk-off sentiment weighed on financials broadly. The declines mirrored weakness across regional bank stocks amid the global rate repricing.

2️⃣ Property and REITs Under Pressure 

Real estate names were among the week's steepest fallers, with City Developments down 5.12% and UOL Group off 4.00%, while several REITs including Mapletree Logistics Trust and CapitaLand Ascendas REIT also declined. Higher-for-longer rate expectations continued to weigh on the sector's valuations.

3️⃣ SGX, Consumer Names Extend Losses 

Singapore Exchange fell 3.95% and DFI Retail Group dropped 3.31%, extending recent weakness as trading-sensitive and consumer-facing counters lagged the broader market. Wilmar International also declined nearly 3% amid soft sentiment across agri-commodity plays.

4️⃣ Shipbuilding, Logistics Names Buck the Trend 

A handful of counters bucked the broader sell-off, with Yangzijiang Shipbuilding up 0.81% and SATS gaining 0.77%, supported by resilient order books and travel-related demand. The pocket of strength offered a modest counterweight to an otherwise broadly negative week.

Technical Snapshot

The STI slipped below its recent trading range this week, with the 1.83% decline marking one of its steeper weekly losses of the year. Breadth was firmly negative, with the majority of constituents finishing lower, led by banks and property names. The index remains in a near-term pullback, though its solid year-to-date gain leaves it well above where it started 2026. (Refer to the STI weekly performance table below.)

📊 Weekly charts:

-  STI weekly chart

 

📅 Week Ahead (14–18 Sep 2026)

All eyes turn to the Fed's two-day policy meeting, concluding Wednesday, 16 Sep, with markets pricing a high probability of a rate hike alongside updated economic projections and the dot plot. Retail sales, industrial production and housing data round out a data-heavy week, while any further escalation or de-escalation in Middle East tensions will remain a key swing factor for oil and risk sentiment.

In China and Hong Kong, investors will watch for any follow-through on Beijing's bank recapitalisation programme and further A-share placement details from state lenders. Trading in AI-related tech names is likely to stay volatile as the market digests competitive and dilution pressures, while any fresh property or stimulus measures would be closely scrutinised for signs of durable domestic demand support.

Singapore markets will continue to take cues from the regional rate and oil narrative, with banks and REITs likely to stay sensitive to any shift in Fed expectations. Regional trade and manufacturing data releases are also on watch, alongside continued monitoring of shipping and logistics names for signs of relative resilience.

🗓️ Overarching Watchpoint

The single biggest binary risk of the week is the Fed's rate decision itself: a hike delivered alongside hawkish guidance could extend the recent rise in yields and pressure risk assets further, while any softer tone on the pace of future tightening could offer relief across equities and reverse some of this week's losses.

Source: Some content and data are excerpted from publicly available market reports.

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