European stocks traded cautiously on Thursday, with both the STOXX 50 and STOXX 600 fluctuating around the flatline at one-month lows as investors continued to assess the situation in the Middle East, where hostilities remain elevated. Sentiment was tempered somewhat by US President Trump’s remarks that the conflict would not last “too long”. Meanwhile, oil prices and bond yields appeared to stabilize following their sharp rise earlier in the week, providing some support to broader market sentiment. The luxury sector was among the biggest decliners, with LVMH (-2.1%), L’Oreal (-1.7%), Hermes (-2.9%) and Richemont (-2.1%) all trading lower. In contrast, SAP (0.8%), Siemens Energy (1.4%) and STMicroelectronics (1.3%) posted gains. Deutsche Telekom was also higher (1.2%) after reports that Elliott built a stake in the firm.

The Japanese yen strengthened past 157 per dollar on Thursday, rallying for a second straight session as traders watched for signs of intervention while weighing prospects for more aggressive policy tightening by the Bank of Japan this year. The move began late Wednesday during New York trading, stoking speculation that authorities had conducted a rate check, which typically precedes official intervention. The yen sank to 40-year lows in late July amid wide interest rate differentials, growing fiscal concerns and elevated energy and import costs, shortly before Tokyo and Washington conducted a joint yen-buying operation. Meanwhile, BOJ board member Hajime Takata raised the possibility of outsized or back-to-back rate hikes to contain rising inflationary pressures. Governor Kazuo Ueda also said that policymakers need to pay greater attention to upside price risks when conducting monetary policy, signaling that a rate hike is likely later this month.

The annual inflation rate in Turkey eased to 31.51% in August 2026 from 31.75% in July, slowing for a third consecutive month and below the expected 31.62%. This marked the lowest reading since March, as inflation moderated for food and non-alcoholic beverages (33.79% vs 37.53% in July) and housing and utilities (39.77% vs 40.32%). Price growth also slowed for clothing and footwear (13.16% vs 16.48%), health (43.46% vs 43.89%), restaurants and accommodation services (31.16% vs 31.65%), and insurance and financial services (25.08% vs 25.64%). In contrast, inflation accelerated for transport (35.08% vs 30.83%), alcoholic beverages and tobacco (30.42% vs 29.38%), and recreation, sports and culture (23.43% vs 23.36%). On a monthly basis, CPI grew 1.84%, the most since May, following a 1.78% gain in July but below the forecast 1.93% increase. Meanwhile, core inflation picked up to a three-month high of 30.07% from 29.91% in July.

The Central Bank of Malaysia left its key interest rate unchanged at 2.75% for the seventh straight policy meeting in September 2026, as expected. The Monetary Policy Committee said the current policy stance remains appropriate for maintaining price stability and supporting economic growth. The central bank said GDP grew robustly by 5.7% in H1 of 2026, driven by stronger-than-expected export performance amid sustained domestic demand, despite uncertainty in global conditions. The strong growth is expected to bring 2026 growth to around 5%, while the economy’s sound fundamentals are expected to keep growth resilient in 2027. Headline and core inflation averaged 1.8% and 2%, respectively, in the first seven months of 2026, with price pressures expected to remain manageable despite higher global commodity prices linked to tensions in the Middle East. The MPC will continue to monitor the latest developments and assess the balance of risks to the outlook for inflation and domestic growth.

Consumer prices in Switzerland jumped by 0.8% year-on-year in August 2026, exceeding market expectations for a 0.5% gain and marking the fastest rise since August 2024. The increase followed a 0.4% rise in July, with the pickup partly reflecting higher petroleum costs and the weaker franc, which is pushing up prices for imported goods. Core inflation, which excludes volatile items such as energy and unprocessed food, also accelerated to 0.4% from 0.3%, marking its first increase this year. On a monthly basis, consumer prices rose 0.1%, reversing a 0.1% decline in July. The pickup was broad-based, with higher costs for petroleum products partly offset by lower prices for clothing and footwear. The data came ahead of the Swiss National Bank’s policy decision later this month, with inflation still within its 0-2% target range despite the acceleration. The SNB has signaled it could cut rates below zero if necessary, while officials expect the policy rate to remain at zero through 2027.

Brent crude fell to around $95 per barrel on Thursday, snapping a three-day rally as investors assessed renewed hostilities in the Middle East alongside efforts to reopen the Strait of Hormuz. President Donald Trump said the latest attacks on Iran would be short-lived despite indicating that the US remains prepared for further strikes, while reiterating claims that the US controls Hormuz. The US launched fresh strikes on Iranian targets around the strategic waterway this week following roughly a month of relative calm, prompting Tehran to retaliate with drones and missiles targeting American bases across the Middle East. Despite the renewed hostilities, crude shipments continued to pass through the strait at an estimated average of 8 million barrels a day. In the US, official data showed crude inventories declined by 4.5 million barrels last week, marking their first drop since late July.