This Week in Markets: Friday 11 September 2026

Brent crude rose 7.32% overnight to US$109.10, and gold fell. That is the sentence worth sitting with. The classic inflation hedge went down 1.17% to US$4,364.50 on the same night crude had its sharpest session of the week. Silver dropped 5.7% to US$64.10. Copper touched a fresh London record above US$14,875 a tonne and then reversed 3.8% to US$14,312. If you have been holding hard assets specifically as protection against an inflation shock, this was the week the protection stopped working.

The reason is in the bond market, not the commodity market. The US 10-year yield rose 12.6bp to 4.97%, the 2-year 14.1bp to 4.58% and the 30-year to 5.37%, and traders now price above 70% odds of a Fed hike on 16 September. Higher real yields raise the cost of holding a metal that pays you nothing, and the stronger US dollar that comes with them reprices everything quoted in it. Australia gets the same treatment with an extra kick. Our 10-year yield is up 13.3bp to 5.38% in afternoon trade, the highest since 2011, the 30-year is at 5.83%, the 2-year is up 50bp since the late-August inflation print, and the Australian dollar is at 71.57 US cents after falling 0.85% overnight. A commodity currency falling in a week the oil price ran 7% tells you which force is in charge.

Thursday night was the fourth losing session in a row on Wall Street and the composition was worse than the headline. The S&P 500 fell 0.58% to 7,591.70, the Nasdaq 0.65% and the Dow 317 points to 52,064.10. The Russell 2000 dropped 1.0% and the VIX rose 8.4% to 17.8. August PPI landed in line with expectations but showed energy costs feeding through, which is the part the bond market read. The SOX semiconductor index fell 2.7% as memory names were hit by a new DeepSeek model designed to cut high-bandwidth memory and storage requirements. Nvidia fell 2.3% on reports the Justice Department is examining its licensing arrangement with Groq.

The more instructive story is the auction. Treasury sold US$22bn of 30-year paper at 5.308%, which cleared 2.7bp below where it was trading seconds before the deadline, with a record low 2% going to primary dealers. Everyone described that as well received. It is worth understanding what it actually means. Dealers are the buyers of last resort, so almost nothing going to them means real money took the entire line, and real money took it because the price had already fallen. A house passed in at $2m last month sells briskly at $1.6m. The genuine failure was the buyback beside it: Treasury offered to take up to US$6bn, received US$10.5bn of offers and bought only US$5.19bn. Each auction that clears at a higher yield makes it harder for yields to come back down, and Wednesday night's Dow was down 405 points on the same problem, Tuesday night's down 628.

Two results after the bell, two halves of the same argument. Oracle fell 5.4% in the session and rose about 4.3% after hours: cloud infrastructure revenue up 121% to US$7.4bn against a US$7.2bn consensus, remaining performance obligations at US$664bn, and 850 megawatts of data centre capacity added. The price of that is US$28.5bn of capex in a single quarter against US$6.9bn for the whole of FY24, with free cash flow negative and buybacks stopped. Adobe fell 2.4% and another 1.7% after hours: it beat on revenue and earnings, AI-linked recurring revenue grew more than 150%, and November-quarter guidance of US$6.8bn to US$6.85bn missed narrowly at the midpoint on a stock already down 29% this year. The market is paying for the AI build and refusing to pay for AI inside existing software. The ECB meanwhile delivered a hawkish hike from 2.4% to 2.65%, its second since the war began, and signalled another as soon as October. Tonight's August CPI is the last inflation read before the Fed, with headline expected to hold at 3.4% and core to ease from 2.5% to 2.4%.

Tuesday closed at 8,921, down 90 points or 1.00%, with only three of eleven sectors higher. Consumer discretionary was worst at -1.88%, Wesfarmers (WES -2.7%) and JB Hi-Fi (JBH -2.2%) leading it down, and information technology fell 1.76% with WiseTech (WTC -2.8%) and Xero (XRO -2.6%). RBA assistant governor Sarah Hunter flagged inflation risks that could push rates higher, and the banks took it: ANZ off 2.6%, CBA 1.8%. Wednesday was a rare flat day at 8,912, down 9 points or 0.11%, and the internals finally favoured the miners: energy up 1.73% with Woodside (WDS +2.6%), materials up 1.51% with BHP (+3.2%) and Rio Tinto (RIO +1.9%). Healthcare was worst at -1.50%. Xero (XRO -3.5%) kept falling, now 63% below its June 2025 high.

Thursday gave all of it back and then some. The index closed at 8,819.4, down 92 points or 1.03%, having been down 1.85% at worst, and all eleven sectors finished lower. Information technology (-1.74%) and materials (-1.63%) led the damage, BHP off 1.8%, Rio 2.7% and Fortescue (FMG -2.4%). NextDC (NXT -3.8%) priced $1.1bn of convertible notes due 2031. St Barbara (SBM +16.4%) was the day's outlier on selling the last of its New Simberi stake.

Today the selling has found the miners properly. At 2pm the ASX 200 is trading at 8,731.2, down 88.2 points or 1.00%, with a session low of 8,699.80. This is an intraday reading with two hours still to run, not a close. At midday materials were down 3.95%, with BHP off 4.4% and Rio 3.6%, the gold sector down 3.93% with Evolution (EVN -4.7%) and Northern Star (NST -3.9%), and the copper names worse again, Capstone (CSC -8.5%) and Sandfire (SFR -6.4%). Pilbara Minerals (PLS -5.6%) and Lynas (LYC -3.8%) followed. Financials were the only real bid, up 0.66%, insurers leading after Tokio Marine flagged interest in Australian opportunities: IAG (+3.2%), QBE (+2.7%) and Suncorp (SUN +2.3%), with NAB (+1.8%) and ANZ (+1.0%) behind them. GQG Partners (GQG -5.8%) reported funds under management down to $149.2bn from $156.4bn in a month, $4.3bn of that net outflows. Take the week as a whole and the index has fallen from Friday 4 September's close of 9,005.9 to 8,731.2, which is 274.7 points, or 3.05%.

Oil did the work and then some. Brent rose 7.32% to US$109.10 and WTI 7.51% to US$103.90, its highest close since May, taking Brent up 23% in September alone. Three things moved at once. Houthi forces seized the Yemeni port of Mocha and reached the Hanish islands in the Red Sea, reportedly with direct Iranian guidance, which adds the Bab al-Mandab to the Strait of Hormuz as a second chokepoint. Saudi crude production fell to its lowest since 1990. And OPEC cut its 2026 demand forecast while China came back into the market as a buyer. Downstream, US average diesel crossed US$6 a gallon for the first time and US petrol is at US$4.26, up 34% on the year. The US Strategic Petroleum Reserve sits at 286.6m barrels, about 40% of capacity and the lowest since 1983, and refilling it competes directly with commercial demand. There is no quick mechanical fix here.

The metals went the other way and the copper move was the sharpest. LME copper set a record above US$14,875 a tonne before reversing 3.8% to US$14,312, and Comex copper fell close to 4% to US$6.53 a pound, after reports the White House plan for tariffs on refined copper had stalled on cost-of-living concerns. That tariff expectation was most of the scarcity trade, so the unwind was immediate: Freeport-McMoRan fell 6.6%, Southern Copper 7.2% and Teck 6.3%, and the copper miners ETF dropped 7% against a 0.6% fall in the S&P 500. Chinese copper imports also hit a six-year low for August. Gold fell 1.17% to US$4,364.50 and silver 5.7% to US$64.10. Iron ore slipped 0.7% to US$99 a tonne, and has now spent four weeks camped either side of US$100.

The currency is the piece most Australian portfolios will feel without noticing. The Australian dollar fell 0.85% overnight and sits at 71.57 US cents, down from 72.33c on Wednesday. It fell in a week when the oil price rose 7% and copper set a record, which is not how a commodity currency is meant to behave. The explanation is that the US dollar is being bid twice over, once as the higher-yielding currency and once as the safe haven in a widening Middle East conflict. For unhedged offshore holdings that is a tailwind. For the resources stocks it is the opposite, because a rising US dollar pushes commodity prices down and makes Australian equities more expensive for overseas buyers at the same time. Bitcoin fell 1% to US$77,445.

Strip out the index and the Australian market this week split on a single question: does your earnings stream get bigger or smaller when the risk-free rate goes up? The miners answered first and loudest. BHP fell 5.3% in US trade overnight and was down 4.4% locally at midday. Rio off 3.6%, Capstone 8.5%, Sandfire 6.4%, Evolution 4.7%, Northern Star 3.9%, Pilbara 5.6%. Nothing in the underlying commodity story changed this week. Copper is still tight, gold is still above US$4,300, iron ore is still near US$100. What changed is the discount rate and the currency the commodity is priced in, and that was enough to take 4% out of the sector in a morning. Past performance is not a reliable indicator of future performance, but the correlation this week is not subtle.

On the other side sat the businesses that are paid more when rates rise. Insurers led the market today, IAG up 3.2%, QBE 2.7% and Suncorp 2.3%, because a higher yield on the investment float is a direct earnings upgrade. The banks held up, NAB up 1.8%, and Challenger (CGF +3.0%) rose on a broker upgrade for the same structural reason. Contrast that with the asset gatherers and the software names on the other side of the ledger: GQG down 5.8% with funds under management off $7.2bn in a single month, Xero down 4.0% on Thursday and 63% below its June 2025 high. The useful read is that this is not growth against value, and it is not quality against junk. It is a straight sort on who benefits from a higher risk-free rate and who is valued off it, and this week it ran right through the middle of the two sectors that dominate the ASX 200.

The conflict is now in its seventh month and it has acquired a second chokepoint. Houthi forces have seized Mocha, pushed onto the Hanish islands and begun targeting energy facilities inside Saudi Arabia, so the Bab al-Mandab now sits alongside the Strait of Hormuz as a route the market cannot assume. Saudi output at its lowest since 1990 is the result. Washington has added sanctions on networks supplying Iran's proxies. The timeline is where the disagreement sits: Vice President Vance and Secretary Rubio have reportedly told the President the war could run to the end of his term in January 2029, against his own public line that it finishes after the 3 November midterms. Oman, which has been negotiating a Hormuz arrangement with Tehran, sees no sign the economic squeeze is working, and Iranian inflation is running near 90% while its leadership calls the war existential. Positioning off a near-term settlement is a bet against every party actually fighting it.

The second front is fiscal and it is the one the bond market is pricing. The President used a two-hour speech in Dallas to promise every adult American US$5,000 if Republicans hold both houses in November, a pledge costed at more than US$1 trillion and estimated to add up to half a percentage point to inflation. Almost nobody believes it is legislatively feasible. That is not really the point. It landed in the same week the 30-year cleared at 5.308% and the Treasury's own buyback came up short, and promises like that get priced into the long end well before anyone votes on them. When a government is managing its own long end while the executive promises trillion-dollar transfers and publicly leans on the central bank, the risk premium on 30-year paper does not fall over time.

Tonight, US August CPI. The last inflation print before the Fed. Headline is expected to hold at 3.4% and core to ease to 2.4%. With Brent at US$109, diesel through US$6 a gallon and PPI already showing energy feeding through, this is the print most likely to miss to the upside.

Thursday morning our time, 17 September, the Fed. A hike is around 70% priced and fully priced by October, and this meeting carries updated projections. Chair Warsh is boxed either way: hold and it reads as political, hike seven weeks from the midterms and it is a fight.

Tuesday 29 September, the RBA. Around 70% priced. The Australian 2-year yield is up 50bp since the late-August inflation print and Macquarie is now forecasting a 10% peak-to-trough fall in national house prices on the back of it.

Thursday night next week, the Bank of England. A third central bank deciding what to do about an oil-driven inflation impulse it cannot influence.

Next week on the ASX: Qantas, Ramelius, Flight Centre and Inghams. Ex-dividends today are WiseTech, Carsales and Cleanaway, so read those headline falls with that in mind.

Iron ore at US$99 a tonne. It has held either side of US$100 for a month. If Chinese steel demand softens from here while the currency keeps sliding, the earnings hit to the big three arrives without the iron ore price having to break.