Oil climbs, yields follow, and Shein lands badly in Hong Kong

Crude first, then everything else

Donald Trump's promise of further strikes on Iran sent oil higher again overnight, and City A.M. had London stocks set to open lower on Tuesday morning. Monday had already gone that way: the Dow fell as crude climbed on what the Wall Street Journal called a fresh Middle East flare-up, and by the New York close the same paper was writing up the session as US stocks falling because Iran war inflation was heating up.

The bond market took the hint. Yields rose across Asia and in the United States early on Tuesday, with the Journal attributing the move to oil prices stoking inflation fears. In Tokyo the Nikkei closed 1.0% lower, dragged down by chip stocks.

Rate expectations are moving in the same direction. The South China Morning Post reported that Chinese and US bond markets have diverged after Fed chair Kevin Warsh struck a hawkish tone at Jackson Hole, and that Hong Kong's property market is now bracing for rate rises on the back of the same remarks.

European data arrived more mildly. German inflation rose to 2.9% in August, below what forecasters had pencilled in. French growth ground to a halt in the second quarter, leaving the economy flirting with recession, on This is Money's reading. In Britain, shop price inflation hit a two-year high as energy costs fed through to consumers. And PetroChina reported first-half profit up 22%, higher oil prices more than offsetting the supply disruption caused by the war.

Shein's debut

Shein finally came to market in Hong Kong, and the shares fell about 10% on the first day of trading, after a listing that raised US$1.7 billion. The BBC recorded the same drop. The SCMP's earlier version of the story had flagged a 28% slide in grey-market dealing before the official open, so the direction of travel was set well before the bell.

City A.M. had previewed the deal as a cut-price flotation arriving just as the company's dominance slows. The Wall Street Journal put a number on the hurry: 4.4 billion reasons, in its telling, to get the IPO done rather than wait for better conditions.

The regulatory weather is not improving either. France has moved against ultra-fast fashion with a levy charged per garment, aimed squarely at Asian e-commerce platforms. For a business built on very high volumes of very cheap items, a fixed fee on each one changes the arithmetic rather than the marketing.

Elsewhere in listings, Westinghouse Electric is preparing to take a nuclear power revival to public markets, according to the Journal.

Bailey's warning, and where the money is going

Andrew Bailey used a letter to the G20 to argue that advanced frontier artificial intelligence models could threaten global financial stability and, in the Bank of England governor's phrasing as reported by Sky News and the Guardian, contribute to a global economic downturn. CNBC carried the same warning. It is an unusual intervention from a central banker whose institution is more often asked about inflation than about model behaviour.

Meanwhile, the Securities and Exchange Commission is pressing investment firms to prove they actually have access to shares in hot startups, the Journal reported — a question about whether promised exposure to private companies exists in the form advertised.

Private money continues to arrive in newer corners regardless. A fund run by Donald Trump Jr. has increased its investment in the prediction market Polymarket by roughly $300 million. In Asia, healthcare dealmaking is picking up, with investors putting money into brain technology and surgical robotics, while foreign investors have raised their holdings of Chinese stocks, drawn by AI hardware and green energy names. China's largest brokerages are pushing abroad as their overseas profits surge.

Two smaller items from London. FTSE index changes are due, with the owner of Ladbrokes and Aston Martin among the names facing demotion, and child trust fund providers face a review of their efforts to trace the owners of £1.5 billion in unclaimed pots.