London Daily

Focus on the big picture.
Wednesday, Aug 26, 2026

Ukraine, inflation fears pummel US stocks but oil surges

Ukraine, inflation fears pummel US stocks but oil surges

With Brent touching $95 a barrel and West Texas Intermediate at $93.78, talk of $100 oil no longer seems far fetched.

Stocks dropped, while investors sought safety in Treasuries as the U.S. warned Russia could take offensive military action against Ukraine as early as next week.

Risk assets added to weekly losses as the U.K. and U.S. advised citizens to leave Ukraine as tensions with Russia rise. Oil spiked higher as a Russian attack could lead to harsh sanctions from the U.S. Russia has repeatedly rejected charges it plans to invade Ukraine.

The S&P 500 fell 1.9% and the Nasdaq 100 dropped more than 3%, following Thursday’s steep declines amid bets on faster Federal Reserve tightening. Treasuries caught bids, with the 10-year yield sinking 11 basis points to about 1.92%. Oil climbed, with brent crude hitting $95 a barrel for the first time since 2014.

For months, the U.S. has been warning European allies that Russia may be preparing to invade Ukraine, massing almost 130,000 troops near the border and staging the largest joint military drills in years in neighboring Belarus. The U.S. has warned of debilitating economic sanctions if Russia attacks, while the Kremlin says NATO expanding further east or deploying weapons in Ukraine are red lines.


A potential Russian invasion of Ukraine could not only disrupt crude supplies but also may spark retaliatory sanctions by the U.S. Oil prices have soared in recent weeks on speculation that demand will outpace supply as the global economy rebounds from the pandemic.

“The Russia/Ukraine news delivered another body-blow to markets, which were already reeling from stubborn inflation numbers and uber hawkish comments from Fed officials,” Cliff Hodge, chief investment officer for Cornerstone Wealth, wrote in a note. “We may have more downside risk over the coming weeks as markets react to headlines”

Friday’s selloff comes a day after a strong inflation reading and comments from a Federal Reserve official sparked a rout in equities and bonds. Odds increased for faster rate increases, with some traders speculating a hike may come even before the next regularly scheduled meeting in March. Those worries were effectively ended Friday when the Fed signaled it would go ahead with the last of its bond purchases before the program ends next month. The central bank has said it won’t raise until after the buys are over.

Inflation concerns weighed on U.S. consumer sentiment, which declined further in early February to a fresh decade low as views about personal finances deteriorated. The University of Michigan’s sentiment index dropped to 61.7, the lowest since October 2011, from 67.2 in January. Consumers expect an inflation rate of 5% over the next year, up from last month’s reading of 4.9% and the highest since 2008.

“Investors are worried that the economy is also slowing just at the worst time, just as the Fed is about to raise interest rates, which could threaten the health of this expansion and bull market,” said Sam Stovall, chief investment strategist at CFRA Research. “Add to it the geopolitical tensions and I think it’s very good reasons why we now have the volatility that we do.”

For more market analysis, read our MLIV blog.

Here are the main market moves:


Stocks


* The S&P 500 fell 1.9% as of 4 p.m. New York time
* The Nasdaq 100 fell 3.1%
* The Dow Jones Industrial Average fell 1.4%
* The MSCI World index fell 1.6%

Currencies


* The Bloomberg Dollar Spot Index rose 0.2%
* The euro fell 0.8% to $1.1341
* The British pound was little changed at $1.3551
* The Japanese yen rose 0.6% to 115.31 per dollar

Bonds


* The yield on 10-year Treasuries declined 11 basis points to 1.92%
* Germany’s 10-year yield advanced one basis point to 0.30%
* Britain’s 10-year yield advanced two basis points to 1.54%

Commodities


* West Texas Intermediate crude rose 4.3% to $93.78 a barrel
* Gold futures rose 1.5% to $1,864.60 an ounce

–With assistance from Sunil Jagtiani, Akshay Chinchalkar and Robert Brand.

Newsletter

Related Articles

0:00
0:00
Close
Church of England Faces Renewed Scrutiny Over Historical Safeguarding Failures
Reform UK Proposes £30 Tax Credit for Long HMRC Telephone Queues
Greater Manchester Secures More Than £100 Million to Upgrade Victorian Railway Stations
East Midlands Railway Urges Essential Travel Ahead of Bank Holiday Strikes
UK Economy Grows 0.4 Percent in Second Quarter as Global and Energy Pressures Weigh
UK Government and Sainsbury’s Launch Plan for 10,000 Youth Work Experience Placements
Scottish Government Plans Tighter Remote-Working Rules and Possible Voluntary Redundancies
Scottish Budget Faces More Than £700 Million Reduction After Tax Revenue Adjustment
Nearly 100 Labour MPs Press Andy Burnham to Back Electoral Reform Commission
UK Energy Price Cap Rises Four Percent to £1,723 as Middle East Conflict Drives Wholesale Gas Costs
Turnbull Warns AUKUS Could Leave Australia Without Promised Nuclear Submarines
California Billionaires Pour More Than $150 Million Into Fight Over Proposed Wealth Tax
German Broadcaster Goes Dark to Warn AfD Could End Its Saxony-Anhalt Service
Badenoch Plans Major Shadow Cabinet Reshuffle as Tories Struggle in Third Place
UK Government Demands Action Against Social Media Content Promoting Dangerous Driving
Labour Backbenchers Prepare Push for Electoral Reform Under Andy Burnham
Fire at Gatwick Airport Car Park Destroys 140 Vehicles and Cuts Local Power
UK Plans Voluntary Libido-Suppressing Medication Programme Across 20 Prisons
NHS England Launches Free Home Cervical Cancer Testing Kits Nationwide
Imperial College Study Warns North Sea Oil Projects Could Cause Hundreds of Billions of Pounds in Climate Damage
UK Inflation Rises to 2.9% as Middle East Conflict Pushes Up Energy Costs
Prime Minister Andy Burnham Visits Kyiv to Strengthen UK Support for Ukraine
Premier League Season Opens With Managerial Debuts and Dramatic Early Fixtures
England Cricket Drops Brydon Carse From Selection Pending Club Investigation
Graeme Dott Convicted of Child Sexual Abuse Offences in Scotland
Protesters Occupy British Aircraft Parts Factory Over Alleged Military Links to Israel
More Than 100 Former British and French Diplomats Call for Sanctions on Israel
Ipsos Poll Shows British Public Split Between Immigration Controls and Economic Growth
British Cybersecurity Agencies Raise Alert Over Growing Threats to Critical Infrastructure
Two-Thirds of England Now Under Official Drought Conditions After Prolonged Summer Heat
Institute of Directors Calls for Urgent Action to Revive Britain’s Stagnant Labour Market
Andy Burnham Visits Kyiv on First Foreign Trip and Pledges Continued British Support for Ukraine
New Daily Diabetes and Weight-Loss Pill Launches in UK Pharmacies
UK Payroll Employment Falls by 94,000 as Labour Market Cools
Onshore Wind Planning Applications in England Reach Ten-Year High After Rules Eased
UK Government Demands Social Media Platforms Remove Dangerous Driving Content After A66 Crash
Thames Water Creditors Face Backlash Over Proposed Corporate Restructuring
Twelve Arrested After Fatal A66 Crash Linked to Organised Crime Investigation
UK Household Energy Debt Could Reach £7 Billion by Year-End
UK Defence Ministry to Use Ukraine Battlefield Data to Train AI Security Systems
UK Government Redirects £4 Billion of Affordable Homes Funding Away From Social Housing
UK Government Borrowing Reaches £1.8 Billion in July, Exceeding Forecasts
UK Prime Minister Andy Burnham Pledges Advanced Missile Support for Ukraine
8Bank of England Holds Interest Rate at 3.75% as Middle East Energy Risks Rise
Prime Minister Andy Burnham to Give Ukraine Classified Storm Shadow Blueprints for Domestic Missile Production
UK Graduate Job Vacancies Plunge 45% to Lowest Levels on Record
Government Audit Reveals Pressure on UK Hospitality From Business Rates and Rising Costs
Kindertransport Survivor Prepares to Revisit European Sites Linked to Her Family’s Wartime Separation
Northern England Transport Operators Strengthen Contingency Plans as Travel Demand Rises
New Implant Trials Offer Treatment Prospects for Patients With Refractory Angina
×