GLOBAL MARKETS — Financial markets around the world are experiencing renewed volatility as investors assess the growing risk of persistent inflation occurring alongside weakening economic growth.

Oil prices have dropped 15% this week, falling to just below $100 per barrel, amid expectations that tensions linked to the Iran war may begin to ease. Despite the recent decline, crude prices remain 64% higher than at the start of the year. Meanwhile, natural gas prices are nearly three times their levels at the beginning of 2026.

The continued rise in energy costs is adding pressure to inflation expectations across major economies. The University of Michigan’s measure of US inflation expectations over the next year climbed to 4.7% in October, up from 4.6% in September and 3.4% in February.

Financial conditions are also becoming more restrictive as government borrowing costs increase. According to the European Central Bank, recent gains in bond yields could cumulatively lower euro zone economic growth by 100 basis points in 2027–28 compared with the institution’s September projections.

Technology stocks have further unsettled investors. On Thursday, the Nasdaq posted its biggest single-day loss since April 2025, intensifying concerns about whether massive investments in artificial intelligence infrastructure can deliver sustainable financial returns.

While the US economy continues to demonstrate relative resilience, partly due to investment in AI, weaker business activity across Europe and stubborn inflation are creating additional challenges for the global economic outlook.

Against this backdrop, investors are closely monitoring movements in energy prices, economic data and central bank policy decisions as concerns about inflation and slowing growth continue to weigh on financial markets.

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