Blog week ending, 4th September 2026
Markets:
- Local and global stocks mostly finished lower for the week as oil prices surged on renewed Middle East fighting.
- US 10-year government bond yields rose above 4.75% for the first time since January 2025, as higher energy costs reinforced rate-hike expectations. Japan’s 10-year yield hit 3% for the first time since 1996.
- Australian 10-year government bond yields broke above 5.2%, reaching its highest level since July 2011, as rising oil prices fuelled inflation concerns whilst stronger than expected economic growth strengthened the case for another RBA rate hike.
- In local stock news, energy stocks outperformed other sectors during the week after renewed US-Iran fighting supported oil prices, with both Viva and Ampol benefiting.
- REA Group shares fell more than 4% after building approvals declined 3.6% in August, although the result was slightly better than market expectations.
- Corporate Travel Management returned to profitability in FY26, reporting a $17.7 million profit compared with a $348.5 million loss a year earlier, reflecting progress in its remediation program. After returning from suspension on the ASX, the stock traded sharply lower than its pre-suspension price but held up better than many had anticipated.
- Gold prices fell early in the week before recovering strongly. Hawkish comments from US Federal Reserve Chair Kevin Warsh assured the public that he was serious about taming US inflation saw falls before interest rate traders pared back hike bets.
- Oil prices rose to their highest levels in five weeks, driven by renewed fighting in the US-Israel war with Iran.
- The Aussie dollar strengthened against the US dollar, supported by positive domestic economic data. The US dollar weakened as traders pared back US rate hike expectations, while the Japanese Yen jumped to a one-month high.
Economy:
- The Australian economy grew 0.4% in the June quarter, up from 0.3% in the March quarter, which had marked the slowest growth in a year. The result exceeded already weak expectations, with growth supported by pockets of private demand. Annual growth slowed to 2.1%, slowing from 2.5% in the first quarter.
- Australian goods imports fell 2.5% in July to a five-month low, steeper than the revised 0.7% decline in the previous month amid sluggish domestic demand and soft business spending.
- Australian company profits were boosted by the mining sector, growing by 1.8% in the June quarter, reversing the 1.5% decline from the previous quarter. Outside of mining, profits were mixed. Sales volumes were supported almost entirely by the mining industry, whilst wages and salaries increased 1.4% during the quarter and 5.7% over the year.
- Australian dwelling approvals fell 3.6% in July, following a downwardly revised 6.9% gain in June. The headline fall was led by a 4.2% drop in approvals for private sector houses, with private sector multi-units easing by a lesser amount. Despite this, the total value of approvals increased.
- US Federal Reserve Chair Kevin Warsh used his Jackson Hole debut to warn inflation is not meaningfully slowing, reinforcing expectations of a September rate hike. He clarified the Fed’s commitment to returning to its targeted 2% inflation but continued to provide little guidance on future policy decisions.
- Warsh also said he was impressed by the overall performance of the US economy, which has strengthened, describing the labour market as stable and operating near full employment, while noting that financial conditions have not materially restrained activity.
- Private businesses in the US added 38,000 jobs in August, the least since January and coming in below forecasts of 47,000. This reflects a broader slowdown in the labour market, though July saw upward revision to 46,000 new jobs. Education and health care, construction, and leisure and hospitality saw the strongest gains.
- US business activity expanded for a third consecutive month in August, in line with expectations. Though, both output and new order growth eased in the period.
- The US trade deficit widened to US$88.6 billion in July, the largest gap since March 2025. Exports declined 2.1% whilst imports rose 2.8%.
- Eurozone annual inflation accelerated to 3.3% in August, up from 2.9% in July and in line with market expectations. It was the highest level since September 2023 and remains well above the ECB’s 2% target, driven largely by a surge in energy prices.
- Japan’s unemployment rate edged down to 2.4% in July 2026 from 2.5% in each of the previous three months. It was a better-than-expected result and the lowest reading since July 2025.
- Japanese core inflation rose 1.8% over the year to August, in line with expectations and above the equivalent July figure. It marks the third consecutive month of acceleration.
- Chinese business activity saw its second straight month of contraction as weak services activity continued to weigh on growth despite a return to expansion in manufacturing output. Soft domestic demand and persistent weakness in the property market remained key headwinds.
Politics:
- The US and Iran exchanged strikes for the first time in about a month as US forces targeted an island in the Strait. Iran responded by launching attacks on US-controlled air bases in the UAE and Jordan, putting upward pressure on oil prices.
- Strikes intensified as the week progressed with the US hitting Iranian military sites after alleged attempts by Iran to target US personnel and commercial shipping in the Strait. Iran retaliated with missile and drone attacks on US bases across the Middle East.
- President Trump announced a deal that would give the US majority control over more than 65 billion barrels of Venezuelan oil reserves, bolstering access to a significant source of energy supply as US strategic reserves remain well below historic levels.
- The Republican-controlled US Congress cleared funding legislation to avert a 1 October government shutdown, at least temporarily. The stopgap funding bill will finance government operations through to 11 December, delaying funding battles until after the US midterm elections.
This information is general advice and does not take account of investors’ objectives, financial situation or needs. Before acting on this general advice, investors should therefore consider the appropriateness of the advice having regard to their objectives, financial situation or needs.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
