Oil prices pushed above $100 a barrel and stock markets fell on Thursday as fighting in the Middle East widened and investors weighed the risk of a long conflict. Bloomberg reported crude trading above $109 a barrel at one point.
The cost of shipping fuel and moving goods is tied closely to crude, so a sustained rise feeds into inflation within weeks. Investors responded by selling stocks in the United States and Europe and pushing government bond yields to multi-year highs.
Borrowing costs climb
A steep selloff in U.S. Treasuries continued as traders worried that higher energy prices could keep inflation above target and delay any cuts in interest rates. Bond yields move opposite to prices, so the jump means the U.S. government and companies alike will pay more to borrow.
The dollar also strengthened, gaining even against traditional safe-haven currencies such as the Swiss franc and Japanese yen, as investors shifted into cash. Energy shares were among the few winners.
Companies keep spending anyway
Higher financing costs have not yet slowed the buildout of artificial intelligence infrastructure. Microsoft plans to expand its data-center capacity to about 38 gigawatts by 2032, more than three times its current footprint, according to Bloomberg. OpenAI also launched a version of ChatGPT built for financial services firms, combining its newest model with market data from providers including LSEG and PitchBook.
Electric vehicle demand rose for a sixth consecutive month in August, data from Benchmark Mineral Intelligence showed, with Europe leading the growth. The Texas Stock Exchange won another round against New York venues, convincing three related energy partnerships to move their primary listings to Dallas.
Debt and dividend promises
U.S. federal debt has crossed the $40 trillion mark, the Treasury Department said. At the same time, President Donald Trump has promised $5,000 payments to adult citizens if his party holds Congress, a pledge that would add to borrowing pressure if it were ever funded.