28th September, 2026 | News

Global Stocks Fall as US-Iran Talks Stall and Oil Prices Surge

Global stocks declined on Monday as oil prices climbed sharply amid stalled US-Iran negotiations, while investors prepared for a busy week of economic data releases and central bank policy decisions.

Brent crude futures rose by as much as 3% to $107.16 a barrel, taking monthly gains to nearly 20%. Oil prices are now almost 50% above their level before the war began in late February, adding to concerns about the impact of higher energy costs on the global economy.

The market moves came after US President Donald Trump rejected an Iranian proposal over the weekend to reopen the Strait of Hormuz, saying Tehran was seeking an agreement. Trump said discussions would continue this week, although Iran has not indicated that it will change its position.

Rising Oil Prices Raise Inflation Concerns

Limited refining capacity has pushed diesel prices to record levels, increasing concerns that higher energy costs could become embedded in inflation, pricing decisions and wage negotiations.

The surge in energy prices is also creating challenges for central banks, which have been raising interest rates in response to inflationary pressures.

The Reserve Bank of Australia is expected to be the next major central bank to tighten monetary policy when it meets on Tuesday.

Markets are also pricing in a 68% probability of another Federal Reserve rate increase in October, while approximately 90 basis points of tightening is priced into expectations through the end of next year.

Global Economy Shows Signs of Resilience

Despite geopolitical tensions and higher borrowing costs, stronger-than-expected US economic data have supported expectations for corporate earnings and continued economic growth.

Bruce Kasman, chief economist at JPMorgan, said the global economy appeared to be entering a period of unusually broad strength.

He added that stronger growth and increased confidence in economies’ ability to absorb elevated energy costs were contributing to the combination of higher interest rates and relatively resilient equity markets.

Major Stock Indexes Decline

MSCI’s All-World index fell 0.1%, although it remained on course for a quarterly gain of about 2.4%.

US equity futures also moved lower, with S&P 500 futures down 0.3% and Nasdaq futures falling 0.7%.

European markets performed relatively better, with the STOXX 600 rising 0.4%. Defensive sectors, including pharmaceutical companies, as well as oil and gas stocks, led gains.

Chinese Stocks Hit One-Year Low

Asian markets recorded broader declines, with Chinese blue-chip stocks falling 1.9% to their lowest level in a year.

The decline followed the introduction of legislation by US lawmakers aimed at preventing the federal government from equipping sensitive systems with Chinese-made components used to transmit data in artificial intelligence data centres.

The development added to existing concerns over technology and trade relations between the United States and China.

US Treasury Yields Continue to Rise

US government bond yields also moved higher as investors adjusted expectations for Federal Reserve policy.

The 30-year Treasury yield increased by two basis points to 5.517%, approaching its highest level since 2004. The yield has risen 27 basis points this month.

The two-year Treasury yield has increased by 55 basis points in September, marking its largest monthly rise since February 2023.

Despite the increase in yields, market-based inflation expectations have remained relatively stable and below their May highs.

Steven Major, global macro adviser at Tradition, said the increase in nominal Treasury yields was primarily being driven by higher real yields and changing expectations for monetary policy rather than a sharp rise in inflation expectations.

Investors Await US