Global Markets — Key Drivers

The main focus today is the U.S. employment report. Combined with geopolitical risks, elevated oil prices, and uncertainty around the Fed’s September policy decision, markets could see elevated volatility.

U.S. Markets

Following more cautious comments from Fed Chair Warsh on 3 September, Treasury yields declined and equities rallied. The Dow Jones rose 1.16%, S&P 500 0.98%, and Nasdaq 1.29%, while the U.S. 10-year yield fell to 4.758%.

Today’s August NFP is expected to show around 55–58K new jobs, following a 23K decline in July. Unemployment is expected to remain at 4.1%.

The key scenarios are:

• Moderately weak NFP: Lower rate expectations → lower yields → support for Nasdaq and S&P.
• Very strong NFP: Higher inflation and rate concerns → higher yields → pressure on technology stocks.
• Extremely weak NFP: Recession fears could trigger selling despite lower yields.

The most positive scenario would be employment slightly below expectations without signs of a sharp economic slowdown.

Oil — A Major Global Markets Risk

Brent remains above $95, while WTI is around $91, supported by Middle East tensions and uncertainty around the Strait of Hormuz.

The key relationship remains:

Oil ↑ → Inflation ↑ → Less room for rate cuts → Yields ↑ → Equity pressure

A move toward $97–100 Brent could significantly weaken global risk appetite. Conversely, easing tensions around Iran and the Strait of Hormuz could trigger a sharp correction in oil and support global equities.

Europe

European equities recovered as bond yields declined, with the STOXX 600 rising around 0.5%.

However, high oil and gas prices combined with elevated bond yields remain a major risk to European growth. European equities therefore remain more vulnerable than U.S. markets.

Asia

Asian markets remain mixed.

Japan is supported by expectations of tighter BoJ policy, while a stronger yen could weigh on exporters. China continues to face concerns over growth and domestic demand.

AI and semiconductor stocks in South Korea and Taiwan may benefit from global technology strength but remain sensitive to higher U.S. yields.

Dollar

Today’s NFP will be crucial for the dollar.

Weak NFP → Fed expectations ↓ → Treasury yields ↓ → DXY ↓

Strong NFP → Fed expectations ↑ → Treasury yields ↑ → DXY ↑

Given geopolitical risks, the dollar’s safe-haven demand remains important. DXY, the U.S. 10-year yield and gold should therefore be monitored together.

Key Global Markets Equation

U.S. NFP → Fed expectations → U.S. 10Y yield → Dollar → Nasdaq/S&P → Gold

A second chain is also important:

Iran/U.S. tensions → Hormuz → Oil → Inflation → Fed → Yields → Equities

Therefore, today’s market direction will depend not only on NFP, but on the combination of NFP and oil prices.

4 September Risk Ranking

Overall Global Markets View

Neutral to cautiously positive, with elevated volatility.

A NFP result close to expectations or moderately weak could support equities through lower yields. A much stronger report could push the 10-year yield above 4.80% and increase selling pressure, particularly in technology stocks.

The biggest downside risk remains oil moving above $100 alongside renewed tensions around the Strait of Hormuz.

GLOBAL MARKETS — COMMODITIES OUTLOOK

Commodity markets remain clearly divided: energy is strong, precious metals remain resilient, agriculture is weak, and industrial metals are more cautious.

Oil

On 3 September, Brent traded around $95.52 and WTI around $91.30, both testing six-week highs.

The primary trend remains bullish, but risks are now two-sided:

• Escalating Hormuz/Iran tensions → Brent could retest $100.
• Easing tensions → Correction below $95 possible.
• Stronger Russia-Ukraine peace expectations → Lower geopolitical risk premium.
• Strong U.S. employment → Less Fed easing, potentially negative for demand.

Brent holding above $95 keeps the $100 area in focus.

Natural Gas

Natural gas is being driven mainly by weather, inventories and LNG exports, rather than geopolitics.

Short term: Positive

High inventories remain the main downside risk.

Gold

Gold rose sharply as lower Treasury yields and a weaker dollar outweighed inflation concerns from higher oil prices. December gold reached approximately $4,536.90 on 3 September.

The key equation remains:

Yields ↓ + Dollar ↓ + Geopolitical Risk ↑ → Gold ↑

Gold therefore remains positive but highly sensitive to today’s employment data.

Silver

Silver gained around 3.5%, showing stronger momentum than gold.

Its dual role as a safe-haven and industrial metal makes it attractive if the U.S. economy slows moderately and Fed easing expectations increase.

Higher potential return, but also higher volatility than gold.

Copper

Copper remains close to neutral as markets remain uncertain about global industrial demand. Supply constraints provide some support.

Short term: Neutral to mildly positive.

Aluminium

Easing supply pressures are limiting gains, although the broader outlook remains constructive.

Short term: Neutral/positive

Medium term: Positive due to supply constraints

Platinum & Palladium

Platinum remains neutral, while palladium is attempting a recovery. Automotive demand and industrial use remain more important drivers than the broader precious-metals rally.

Platinum: Neutral

Palladium: Neutral to mildly positive

Agriculture

Agricultural commodities remain under pressure.

• Soybeans: Negative due to profit-taking.
• Wheat: Negative as Russia-Ukraine diplomacy reduces supply-risk premiums.
• Coffee: Negative amid expectations of strong Brazilian production.
• Cotton: Negative.
• Sugar: Negative due to supply expectations.
• Cocoa: Negative due to profit-taking and improved West African production expectations.
• Corn: Neutral to negative.

Commodity Outlook — 4 September 2026

Key Commodity Equation

Today’s commodity direction will be driven primarily by oil + U.S. employment.

Weak NFP:

Fed easing expectations ↑ → Yields ↓ → DXY ↓ → Gold/Silver ↑

In-line NFP:

Gold and silver can remain supported, while oil remains focused on geopolitics.

Strong NFP:

Fed easing expectations ↓ → Yields ↑ → DXY ↑ → Gold/Silver ↓

Oil, however, may remain supported by geopolitical risk regardless of the employment outcome.

4 September Priority List

1. Oil: Strongest geopolitical momentum
2. Gold: Highly sensitive to yields
3. Silver: Higher-beta precious metal
4. Natural Gas: Weather-driven strength
5. Copper: Waiting for a clearer breakout
6. Agriculture: Broad selling pressure

Overall, Brent approaching $100 remains a key risk for global inflation expectations, while any significant easing of Middle East supply disruptions would provide relief for global markets.