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Commerzbank Says as Oil Prices Continue Rising as Middle East Conflict Intensifies, US Dollar Stronger

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Brent crude trades above $107 a barrel over growing concerns about the safety of shipping in the Red Sea following a series of attacks by Iran-backed Houthi rebels, according to Commerzbank Research in a note.

The Houthis have seized a strategic port on the Red Sea, while Iran and Gulf states are expected to meet Monday in an effort to reach an agreement over the Strait of Hormuz, according to sources cited by the Financial Times. Meanwhile, Iran has resumed production of ballistic missiles, the Wall Street Journal reports.

US Treasury Secretary Scott Bessent said the Treasury market remains in "very good shape," pointing to the term premium being at its lowest level in years, according to Commerzbank.

On buybacks, Bessent said the Treasury repurchased less than initially planned, explaining that "we buy cheap."

The US dollar is stronger, said the bank.

In Europe, the EU has renewed efforts to secure approval for the use of frozen Russian assets, according to the FT.

European Central Bank officials anticipate further tightening in the coming months, with an October move still under consideration, according to sources cited by Bloomberg and Reuters.

The French government is expected to lower its growth forecast for this year, while the likelihood of a 5.3% budget deficit is rising, according to Les Echos.

The United Arab Emirates plans to invest $46 billion in Germany as part of efforts to strengthen bilateral ties, said Commerzbank.

What else is happening in Sectors?

Sectors

Sector Update: Financial Stocks Retreat Late Afternoon

Financial stocks declined in late Thursday afternoon trading, with the NYSE Financial Index decreasing 0.5% and the State Street Financial Select Sector SPDR ETF (XLF) shedding 0.4%.The Philadelphia Housing Index was falling 2.1%, and the State Street Real Estate Select Sector SPDR ETF (XLRE) was down 0.9%.Bitcoin (BTC-USD) was shedding 1.5% to $77,084, and the yield for 10-year US Treasuries jumped 10.7 basis points to 4.944%.In economic news, the US Bureau of Labor Statistics' wholesale price inflation gauge, the Producer Price Index, jumped 5.4% from a year ago in August, above the 5.3% forecast in a Bloomberg-compiled survey. The PPI edged up 0.4% month over month, as expected, following a 0.1% increase in July. The August print is the highest growth rate since May.US initial jobless claims fell to 206,000 in the week ended Sept. 5 from an upwardly revised 207,000 in the previous week, compared with expectations for 205,000 in a Bloomberg-compiled poll.The European Central Bank raised its three key interest rates by 25 basis points on Thursday, as the energy shock caused by the Middle East war pushes inflation in the euro area above its 2% medium-term target.In corporate news, Apollo Global Management's (APO) Apollo Sports Capital is interested in investing in an NFL team, CEO Al Tylis said at Bloomberg's Power Players New York event, Bloomberg reported Thursday. Apollo shares were down 1.9%.Blackstone (BX) said Thursday private equity funds affiliated with Blackstone Capital Partners and Blackstone Energy Transition Partners have signed a deal to acquire Flow Control from Audax Private Equity. Shares were down 2.7%.TPG (TPG) is exploring a sale of healthcare software company Lyric that could value the business at about $5 billion, Reuters reported. TPG shares fell 4.1%.Coinbase (COIN) is positioning stablecoin payments as a key pillar of its future revenue strategy as it seeks to reduce its dependence on trading, Bloomberg reported, citing an interview with CEO Brian Armstrong. The US cryptocurrency exchange is working with banks, fintech firms and other companies to move more payment activity into stablecoins, a $300 billion market Armstrong believes could grow tenfold by 2030, the report said. Coinbase shares were shedding 1%.

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Sectors

Sector Update: Energy Stocks Decline Late Afternoon

Energy stocks were lower late Thursday afternoon, with the NYSE Energy Sector Index easing 0.2% and the State Street Energy Select Sector SPDR ETF (XLE) decreasing 0.4%.The Philadelphia Oil Service Sector Index was shedding 0.6%, and the Dow Jones US Utilities Index was declining 0.9%.In geopolitical news, an Iran-aligned militia group's threat to the alternative shipping route through the Strait of Hormuz grew stronger. Iran-aligned Houthis seized control of Yemen's port city of Mocha on Thursday, military sources said, gaining further leverage over the Bab el-Mandeb Strait, the southern outlet of the Red Sea and an important shipping route, Reuters reported.Front-month West Texas Intermediate crude oil jumped 6.4% to $102.23 a barrel, and the global benchmark Brent crude contract popped 6.2% to $107.44 a barrel. Henry Hub natural gas futures rose 0.6% to $2.84 per 1 million BTU.In sector news, the Organization of the Petroleum Exporting Countries cut its global oil demand outlook for 2026 on Thursday as high energy prices are expected to weigh on consumption. The cartel now expects oil consumption to increase by 380,000 barrels this year, down from its prior forecast that called for a gain of 580,000 barrels.US crude oil stocks, including those in the Strategic Petroleum Reserve, fell by 1.6 million barrels in the week ended Sept. 4 following a decrease of 7.6 million barrels in the previous week. Excluding inventories in the SPR, commercial crude oil stocks fell by 400,000 barrels after a 4.5-million-barrel decline in the previous week, a much smaller drop than the 1.4-million-barrel decrease expected in a survey compiled by Bloomberg.US natural gas stocks rose by 40 billion cubic feet in the week ended Sept. 4, above the 34 billion increase expected in a survey compiled by Bloomberg and following an increase of 30 billion cubic feet in the previous week.In corporate news, Constellation Energy (CEG) agreed to acquire RISEC Holdings, owner of the Rhode Island State Energy Center, from Shell's (SHEL) North America energy unit, for $715 million. Constellation shares fell 2%, and Shell rose 0.5%.Braskem (BAK) said Wednesday that its subsidiary Voqen Energia amended a natural gas supply agreement with Petrobras (PBR), extending the contract through Dec. 31, 2029, from Dec. 31, 2026. Braskem shares jumped past 7%, and Petrobras was up 2.3%.TotalEnergies (TTE) and its partners plan to invest $10 billion in Angola over the next five years to increase oil output in the country, news outlets reported as early as Wednesday, citing remarks made by TotalEnergies CEO Patrick Pouyanne at a conference. TotalEnergies shares were down 0.2%.Vistra (VST) was Smart Insider's stock pick of the week after Chief Executive Jim Burke bought $1.2 million worth of shares between Aug. 24 and Sept. 1 at an average price of $135.38. Vistra shares were shedding 2.2%.

$BAK$CEG$PBR$SHEL$TTE$VST
Sectors

Sector Update: Tech Stocks Fall Late Afternoon

Tech stocks were lower late Thursday afternoon, with the State Street Technology Select Sector SPDR ETF (XLK) falling 1.4% and the State Street SPDR S&P Semiconductor ETF (XSD) decreasing 0.7%.The Philadelphia Semiconductor Index dropped 2.5%.In corporate news, Microsoft-backed (MSFT) OpenAI Thursday launched ChatGPT for Financial Services, a ChatGPT Work product to support projects like equity research and financial models. Microsoft shares were fractionally higher.Advanced Micro Devices-backed (AMD) South Korean AI startup Upstage is considering a pre-listing funding round as one of its capital-market options, Bloomberg reported, citing co-founder and Chief Technology Officer Hwalsuk Lee. The company closed a 560 billion won ($416 million) Series C financing this year, bringing its funding to date to 730 billion won, the report said. AMD shares were down 3.4%.Amazon's (AMZN) Amazon Ads, the tech giant's advertising arm, has entered into a partnership with OpenAI through which it will let its advertisers place ads in ChatGPT, according to media reports. Separately, Amazon-backed Anthropic has granted the EU Agency for Cybersecurity, or ENISA, access to its Mythos 5 AI model, months after first promising access, Bloomberg reported. Amazon shares were decreasing 0.5%.Apple (AAPL) is apparently prioritizing volume gains over margins with its lower-than-expected pricing on the new iPhones, including its first-ever foldable smartphone, Morgan Stanley said in a note. The company set a starting price of $1,999 for the foldable iPhone Duo on Wednesday. Apple's new CEO John Ternus led the launch event that included the iPhone 18 and Watch Series 12. Apple shares rose 3.3%.

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