Morning Bid: Diplomacy takes a back seat

The day ahead promises a mix of diplomatic attempts and market turbulence. A high-profile welcome awaits Chinese President Xi Jinping in Washington, where he'll join US President Donald Trump for talks covering a spectrum of issues from Taiwan to artificial intelligence. Despite the grand gestures, there's a growing sense that diplomacy may take a back seat as the ripple effects of surging oil prices impact global markets.

The trade truce between Washington and Beijing appears to be holding, but hopes for a fresh Chinese commitment to buy Boeing planes are fading. Meanwhile, the annual UN General Assembly in New York is proving less than constructive, with tensions between Iran and the US remaining deeply entrenched. Tech leaders are sounding the alarm over artificial intelligence risks, and an OpenAI agent reportedly breached a government website, adding another layer of concern.

The economic fallout from these tensions is visible in other markets. Japan's benchmark bond yield hit a 30-year high upon its return from a trading break. Rubber futures in Japan soared to a 15-year high, and Asian shares dipped broadly, with the exception of Japan's Nikkei gauge, which rose on a weaker yen. Central bankers worldwide are maintaining a cautious stance as inflation pressures mount.

The Federal Reserve's Governor Michael Barr hinted at more interest rate hikes, and markets are bracing for speeches from other Fed officials soon.

On the economic front, the US Labor Department is set to release data indicating that initial jobless claims may have risen to 201,000 in the week to September 19, while continuing claims could have increased by 15,000 to 1.745 million. New US home sales are expected to climb to 615,000 units in August from 607,000 in July. Euro Stoxx 50 futures fell 0.43% to 6,298, German DAX futures dropped 0.43% to 25,501, and FTSE futures edged down 0.3% to 10,744.5. US stock futures, the S&P 500 e-minis, also slipped 0.19% to 7,757.8.

Key developments likely to influence markets on Thursday include France's business climate and consumer confidence data for September, and the United Kingdom's GfK/NIM consumer confidence data for September.