Overseas Markets End Mixed as Oil, Yields Drive Trade

NEW YORK – September 26, 2026 (STL.News) Overseas Markets – Overseas stock markets ended a volatile week with sharply different results across Europe and Asia as investors balanced renewed enthusiasm for artificial intelligence against high oil prices, a global bond selloff, inflation concerns and uncertainty surrounding the continuing U.S.-Iran conflict.

European stocks finished the week higher, snapping a three-week losing streak, while Japan’s Nikkei 225 rallied strongly into Friday’s close. India recorded a seventh consecutive weekly decline, Hong Kong fell Friday, and Australia ended the week under pressure.

The week’s trading demonstrated how closely global markets have become linked to developments in energy and government bonds.

Oil prices retreated at times as investors considered the possibility of diplomatic progress between the United States and Iran and an eventual reopening of the Strait of Hormuz. At the same time, government bond yields surged as investors worried that elevated energy prices could keep inflation high and force central banks to maintain or increase restrictive interest rates.

Artificial intelligence provided a counterweight. Renewed demand for AI-related technology stocks helped support global equities despite deteriorating bond markets.

By Friday, the result was a global market that remained surprisingly resilient despite borrowing costs reaching levels not seen in decades.

Overseas Markets – Overseas markets Friday snapshot

Major overseas benchmarks ended Friday as follows:

*Mainland Chinese markets were closed Friday for the Mid-Autumn Festival. The Shanghai Composite’s 3,888.37 level was its latest available close.

The broad picture was therefore mixed. Europe recovered, Japan ended the week with substantial momentum, while several other Asian markets remained under pressure.

Overseas Markets – European stocks break a three-week losing streak

Overseas Markets: Europe produced one of the clearer positive weekly performances.

The pan-European STOXX 600 closed Friday approximately 0.4% higher and gained 0.5% for the week, according to closing market data. The advance ended three consecutive weekly declines during which the index had lost approximately 3%.

It was also the STOXX 600’s strongest weekly gain since early August.

The improvement came despite continuing uncertainty surrounding the Middle East and a sharp rise in government bond yields.

Lower oil prices provided important support.

Energy shares were Friday’s weakest major European sector, falling 1.3% as crude prices retreated. Airlines benefited from lower energy prices, with travel and leisure shares advancing.

Banks were among the strongest European performers Friday, with the sector gaining 1.3%. Financial services also advanced.

Europe’s sensitivity to energy prices was evident throughout the week. The region depends heavily on imported fuel, meaning large increases in oil can feed directly into business costs, consumer inflation and central-bank policy expectations.

When crude briefly dropped below $100 a barrel earlier in the week, European and global equities rallied. That advance lost momentum Wednesday as oil and bond yields moved higher again.

The STOXX 600 nevertheless recovered by Friday and secured its first weekly gain in four weeks.

Overseas Markets – London’s FTSE 100 records another weekly gain

Overseas Markets: Britain’s FTSE 100 closed Friday at 10,695.25, gaining 0.14% for the session.

The index recorded its second consecutive weekly gain, with strength in banks and mining shares helping offset weakness among energy companies as crude prices declined.

The performance illustrates the complicated relationship between oil and major stock indexes.

Falling crude can hurt the share prices of large energy producers, which carry significant weight in Britain’s market. At the same time, lower energy prices can benefit consumers and businesses and reduce inflation expectations.

For the broader economy, lower oil can also reduce pressure on the Bank of England to maintain tighter monetary policy.

That tension between weaker energy shares and stronger financial and economically sensitive stocks helped leave the FTSE slightly higher Friday and positive for the week.

Overseas Markets – Japan ends the week with a strong rally

Overseas Markets: Japan was one of Friday’s strongest major overseas markets.

The Nikkei 225 jumped 850.21 points, or 1.30%, to close at 66,364.20.

The rally marked a fifth consecutive advance for the Japanese benchmark.

Semiconductor stocks and banks helped lead the move. Technology companies benefited from renewed enthusiasm surrounding artificial intelligence, while financial shares were supported by the higher-interest-rate environment.

Japan’s bond market was also undergoing a historic adjustment.

The country’s benchmark 10-year government bond yield touched 3.121% Friday, a level not seen since 1996.

That represents a dramatic change for an economy that spent years operating with extremely low and, at times, negative interest rates.

Higher Japanese yields can have consequences far outside Tokyo.

For years, low Japanese interest rates encouraged investors to borrow cheaply in yen and invest the proceeds in higher-yielding assets elsewhere. A sustained increase in Japanese rates and bond yields can change those incentives and potentially affect international capital flows.

Despite those concerns, Japanese equities ended Friday with substantial upward momentum.

Overseas Markets – Hong Kong falls as technology shares weaken

Overseas Markets: Hong Kong moved in the opposite direction Friday.

The Hang Seng Index fell 251.04 points, or 1.01%, to 24,510.09.

The decline extended a late-week retreat and came amid weakness in technology shares and concerns about higher global interest rates.

Hong Kong’s monetary conditions are particularly sensitive to changes in U.S. interest rates because of the Hong Kong dollar’s link to the U.S. dollar.

Expectations that U.S. rates could remain higher therefore have direct implications for financial conditions in Hong Kong.

The market was also operating during a holiday-thinned Asian session.

Mainland China, South Korea and Taiwan were closed Friday for holidays, reducing activity across the region.

Overseas Markets – Mainland China closed Friday

Overseas Markets: Mainland Chinese markets did not trade Friday because of the Mid-Autumn Festival holiday.

The Shanghai Composite’s latest available level was 3,888.37 from Thursday.

Investors therefore should not interpret that figure as a Friday market move. It was simply the final available closing level before the holiday.

China remains an important variable for international markets because of its role in global manufacturing, commodities and trade.

The week’s U.S.-China summit also attracted considerable investor attention. President Donald Trump hosted Chinese President Xi Jinping at the White House Thursday.

The meeting carried considerable symbolism, but produced no major announced breakthrough on difficult issues, including trade, artificial intelligence and Taiwan.

Markets will continue watching subsequent U.S.-China negotiations for evidence of changes in trade or technology policy.

Overseas Markets – India records seventh consecutive losing week

India remained one of the clearest weak spots among major overseas markets.

The Nifty 50 gained 0.34% Friday to close at 23,140.50, while the Sensex advanced 0.43% to 73,895.74.

Those Friday gains, however, only partially recovered earlier losses.

For the full week, the Nifty 50 declined 0.9%, and the Sensex lost 0.5%.

It was the seventh consecutive weekly decline for both benchmarks and India’s longest such losing streak in six years.

The streak is historically unusual. Before this period, the Nifty had experienced seven or more consecutive losing weeks only four times during the previous 25 years.

Oil was a significant factor.

India imports much of the energy it consumes, making its economy particularly vulnerable to elevated crude prices. Higher oil can increase the country’s import bill, contribute to inflation and put pressure on corporate costs and household spending.

Higher global bond yields added another problem.

Financial stocks lost 1.6% for the week, while information technology stocks declined 2.4%. Both sectors recorded their fourth consecutive weekly losses.

India’s smaller companies also struggled. Small-cap shares lost approximately 0.9% for the week, while mid-cap stocks declined 2.1%.

Brent crude traded around $105.50 a barrel during Friday’s Indian session as traders weighed potential U.S.-Iran diplomatic progress against ongoing risks to Middle Eastern energy supplies.

Overseas Markets – Australia finishes Friday lower

Australia’s S&P/ASX 200 fell 0.43% Friday to 8,665.01.

Australian equities came under substantial pressure Thursday as higher oil prices revived inflation concerns and investors considered the possibility of a more restrictive Reserve Bank of Australia.

Australia’s unemployment rate also came in higher than expected Thursday, complicating the monetary policy outlook.

Investors face an unusual mix of inflation concerns, partly driven by energy costs, and evidence of some softening in the labor market.

That leaves the Reserve Bank of Australia with competing economic signals as investors look toward its next policy decision.

Overseas Markets – Oil drives dramatic changes in market sentiment

Oil was arguably the week’s most important cross-market variable.

Prices had fallen for several consecutive sessions early in the week as investors saw indications that Middle Eastern energy supplies could improve.

On Tuesday, Brent crude fell to approximately $98.90 a barrel after reports that Iran could consider reopening the Strait of Hormuz within seven days if the United States eased military pressure.

Saudi Arabia also restarted operations through its East-West Pipeline, easing some immediate concerns surrounding crude supplies.

But the relief proved temporary.

Oil subsequently moved higher again as geopolitical tensions persisted. By Friday’s Indian trading session, Brent was around $105.50.

Later Friday, oil prices fell approximately 3% as hopes for a U.S.-Iran truce strengthened.

Reports indicated negotiators were exploring a phased path that could include Iran reopening the Strait of Hormuz and the United States lifting its economic blockade.

Those negotiations remained uncertain, however, and concerns continued about attacks by Houthi fighters against Saudi Arabia and the potential effect on energy supplies.

The repeated movement between roughly $100 and $105 crude during the week produced corresponding changes in inflation expectations, bond yields and equity sentiment.

Treasury yields reach highest level since 2007

Overseas Markets: The bond market produced one of the week’s most significant financial developments.

The benchmark 10-year U.S. Treasury yield reached an intraday high of 5.2297% Friday, its highest level since 2007.

That was the high — not the Friday closing or late-session yield.

As oil prices declined later Friday, Treasury yields eased. The 10-year yield subsequently stood at approximately 5.158%, down slightly on the session.

The U.S. 30-year Treasury yield also climbed as high as 5.5319%, its highest level since 2004, before easing.

Bond-market volatility increased dramatically. The ICE BofA MOVE Index, a widely followed measure of Treasury-market volatility, rose approximately 30% during the week, its largest weekly increase since the tariff-related turmoil of April 2025.

The significance extends well beyond bonds.

Government bond yields serve as reference rates throughout global finance. When Treasury yields rise, borrowing costs can increase for corporations, homeowners and governments.

Higher yields can also reduce the relative attractiveness of stocks because investors can receive larger returns from government debt without taking equity-market risk.

Growth and technology companies can be particularly sensitive because much of their valuation depends on earnings expected well into the future.

AI enthusiasm offsets some bond-market pressure

Overseas Markets: Despite the bond selloff, global stocks proved remarkably resilient.

Artificial intelligence was an important reason.

Global equity funds attracted $44.1 billion in net inflows during the week ended Sept. 25, according to LSEG Lipper data. That represented the largest weekly net purchase since early July and ended two consecutive weeks of outflows.

Technology funds benefited from renewed AI enthusiasm.

Global investors also responded to strong semiconductor demand, while enthusiasm surrounding Meta’s Muse AI agent contributed to renewed interest in large technology companies.

The AI trade helped offset concerns about oil, inflation and higher government bond yields.

That was particularly evident Friday, when stocks held firm even as the Treasury market continued to experience substantial volatility.

What investors will watch next week?

Overseas markets enter the final trading days of September facing several unresolved issues.

The first is oil.

A sustained decline in crude could reduce inflation expectations and ease pressure on central banks and government bonds. Renewed military escalation or disruptions to Middle Eastern energy infrastructure could produce the opposite result.

The second is the global bond market.

The U.S. 10-year Treasury yield’s move above 5% and Japan’s 10-year yield reaching levels not seen since 1996 represent significant changes in global financial conditions.

The third is central-bank policy.

Investors are increasingly considering whether persistent inflation and elevated energy prices could require additional rate increases rather than the monetary easing markets had anticipated at other points in the economic cycle.

Finally, investors will watch whether enthusiasm around artificial intelligence and semiconductor demand can continue to support equity valuations despite substantially higher bond yields.

The week ended Sept. 25 ultimately produced no single direction for overseas markets.

Europe recovered enough to break a three-week losing streak. Japan finished with a powerful rally. India suffered a seventh consecutive weekly decline. Hong Kong and Australia ended Friday lower, while mainland China was closed for a holiday.

The common thread was the struggle between two powerful market forces: optimism surrounding technology and potentially improving energy supplies on one side, and high oil prices, inflation, geopolitical risk and rapidly rising borrowing costs on the other.

Which side gains the advantage could determine the direction of overseas markets as investors move into the final days of September and the beginning of October.

Market data note: Closing levels and percentage changes are based on market data available after the Sept. 25, 2026, sessions. Mainland China’s Shanghai Composite did not trade Friday because of the Mid-Autumn Festival holiday. Percentages may vary slightly among data providers because of rounding.

Disclaimer: This article is for informational and news purposes only. It does not constitute investment advice, financial advice, or a recommendation to buy or sell any security. Investors should conduct their own research and consider their individual financial circumstances and risk tolerance before making investment decisions.

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