Stocks Turn Positive in Sept. On a Trio of Foreign Affairs Improvements: Sept. 21, 2026

Stocks are now positive in the seasonally unfriendly month of September following a trio of favorable foreign affair developments. Middle East tensions appear to be cooling as President Trump seemed open-minded about meeting with the head of Iran, Mazoud Pezeshkianm, this week at the UN’s General Assembly. The news raised optimism that a possible truce could incrementally restore traffic along the critical Strait of Hormuz waterway. Moreover, mounting evidence of Saudi crude supplies reaching export destinations is additionally sending oil to its fourth consecutive session of declines, with WTI trading below $92 per barrel after hovering just under $107 last Tuesday. Furthermore, encouraging talks involving Washington and Beijing regarding AI, tariffs and investment ahead of this Thursday’s summit between the US commander-in-chief and his Chinese counterpart, Xi Jinping, are further bolstering Wall Street’s risk-on sentiments, especially for tech shares, with the Nasdaq 100 jumping more than 2.3%. But the cyclical trade is catching bids as well, as 7 of the 11 principal sectors gain, driving the broader S&P 500 to a climb north of 1.3%, partially a result of cheaper fuel and strengthening Treasuries. Indeed, the yield curve is plunging in bull-flattening motion led by duration as the longer tenors benefit disproportionately from softening inflation expectations in response to sinking energy costs. A potential alleviation in military expenditures stemming from constructive negotiations with Tehran is also curbing fiscal deficit concerns and helping the fixed-income space. Buoyant animal spirits are catapulting cryptocurrencies with Bitcoin and Ethereum soaring to eight-month highs on the back of the CFTC and SEC supporting digital asset adoption subsequent to the Clarity Act failing to clear a key Congressional barrier just a few days ago. Elsewhere, commodities ex copper are descending, prediction markets are experiencing engagement while the greenback and premiums for volatility protection instruments are flat.

Positive China, Middle East News Could Drive Year-End Rally

Additional positive news from China and the Middle East could generate the conditions necessary for markets to advance further from here. Beijing, like leaders in Washington, doesn’t want to slowdown the pace of AI development and adoption, and agreements between Presidents Trump and Xi Jinping are poised to inject a fresh dose of fuel into the tech trade. Meanwhile, light at the end of the tunnel concerning the US-Iran conflict would bury price pressures considering that heavy energy charges are the only reason inflation is above 3%, with the core gauge at a 64-month low of 2.4%. The possibility of decelerating cost forces led by West Texas Intermediate (WTI) trading south of $80 per barrel would drop yields across the curve by about 30 basis points and raise the chance that last week’s Fed hike was a one-and-done, with the October move geared to be a pause, especially with the midterm elections right around the corner. Such an occurrence, moreover, would lift the likelihood that the next change in the central bank’s benchmark rate will likely offer a cut rather than another increase, particularly as the base effects of 2026’s elevated crude costs make it easier for the monetary policy authority to approach its 2% objective in 2027.

International Roundup

China Pledges to Further Open Financial Markets

The People’s Bank of China, which recently decided to maintain its key 3% intertest rate, pledged this morning to further open its financial markets. At a symposium today, PBOC Governor Pan Gongsheng said the initiative includes improving policy supply, expanding the two-way opening of financial markets, optimizing cross-border payment services and implementing policies to improve the international use of the renminbi. In a highly expected outcome, the central bank on Saturday decided to maintain its one-year and five-year loan prime rates at 3% and 3.5%. It was the sixteenth consecutive monthly decision to hold.

Unemployment Rate Falls in Singapore

Singapore’s job market continued to expand during the second quarter and the country’s unemployment rate fell from 2% to 1.9%, although payroll growth for residents slowed slightly. Nevertheless, the unemployment rate was stronger than the economist consensus estimate for a repeat of the first quarter’s 2% level. The ratio of vacant positions to available employees, at 1.46, also depicted strong labor demand. From a broader perspective, total employment jumped by 11,400 during the April through June period, according to the Ministry of Manpower. It was the nineteenth consecutive quarter of payroll expansion. Employment additions among residents, however, decelerated from 5,400 in the first quarter to 2,200 in the recent three-month reporting period. Among sectors, demand for construction and manufacturing workers contributed to an additional 9,200 work permit holders punching time clocks while resident employment was supported by the following segments:

• Transportation and storage
• Public administration and education
• Health and social services,
• Professional Services
• Financial Services
• Information and communications

Singapore has been benefiting from strong demand for its artificial intelligence hardware with exports of electronic products helping to push the island city’s trade surplus from SG $10.98 billion in July to SG $13.78 billion last month. Domestic conditions, however, appeared to have weakened with the country previously reporting that retail sales were up only 1.5% y/y in July, a slower pace than 5% y/y in the preceding month. 

Decline in UK Home Prices Continues

The average asking price for homes prices in the UK posted its seventh consecutive month of year-over-year declines despite climbing 0.7% m/m, according to the Rightmove House Price Index for September. The m/m result was a reversal from the preceding period’s 2% slip while the y/y metric moderated slightly from August’s 1% retreat. During the month, the average asking price was £367,440. Rightmove maintains a combination of poor affordability and ample inventory is hindering price hikes. The firm points to the average monthly mortgage payment increasing by £180 since the February start of the US-Iran, a result of the two-year mortgage rate moving from 4.25% to 5.29%. Potential home buyers are also uncertain about the future direction of interest rates. Inventory is also abundant with the number of homes for sale hitting a 12-month high.