Risk-Off Sentiment Returns as Oil, Yields Climb in Europe

Today's session was filled with data releases, but markets barely reacted to the economic figures, with interest rate outlooks staying steady. The Eurozone Flash CPI report stood out: headline inflation climbed to 3.3%, in line with forecasts, while the core rate fell to 2.4%, its lowest since June. The ECB is projected to raise rates at its next meeting, although additional tightening now faces a higher hurdle.

Around 08:00 GMT, all asset categories saw significant shifts. The trigger is unclear, but it came as WTI oil hit a fresh one-month peak and Treasury yields continued rising. That sparked a decline in stocks, bitcoin, and gold, while the US dollar strengthened. The moves continued for an hour before settling.

The only significant news around that time came from Maritime Risk Management Organization, Marisks, which said that two oil supertankers were hit by unidentified projectiles in quick succession while passing through the Strait of Hormuz. That may have triggered a jump in oil prices, which then spilled into other markets.

During the US session, the ISM Manufacturing PMI and Job Openings data are due. The ISM is forecast at 55.2, down from 55.6, but markets may not react much unless the figure misses sharply to the downside. The US CPI is still the key release, given the Fed's inflation focus.

For context, the S&P Global PMIs reported a small decline in manufacturing. According to the agency, growth momentum has moved from manufacturing to services from Q2 to Q3. With lower safety stock building and supply constraints slowing factory output, services are now a primary engine for ongoing US growth, highlighting reliance on consumer spending and financial services expansion.

US job openings are projected at 7.313M, compared with 7.359M previously. The data is likely to be overlooked as it lags by two months and attention remains on inflation, with the labour market still considered stable.