Morning Bid: Diplomacy takes a back seat

A look at the day ahead in European and global markets from Rocky Swift

With the effects of surging oil prices cascading through markets and supply chains, diplomatic efforts to settle simmering trade spats and military conflicts are looking pretty grim.

But they're at least making a good show of it in Washington. US President Donald Trump, a brass band, cannons, and a 100-foot-long red carpet were part of the welcoming party for Chinese President Xi Jinping as he arrived for his first trip to the United States in three years.

Trump and Xi are expected to speak on a raft of issues, from Taiwan and Iran to concerns about artificial intelligence. Hopes have dimmed for a new Chinese commitment to buy Boeing planes. But Treasury Secretary Scott Bessent said Washington and Beijing had reached a deal to extend their trade truce.

Talks at the annual UN General Assembly in New York did little to lighten the mood. Ukrainian President Volodymyr Zelenskiy warned that a hard winter lay ahead, as Russia continued strikes on Kyiv.

Iran and the US remained far apart on a peace plan, and tech leaders sounded alarm about AI risks, just as Australia announced that an OpenAI agent breached a government website.

Woes in the US Treasuries market manifested in Japan, which returned from a three-day trading break to see its benchmark government bond yield surge to a 30-year high.

Rubber futures in Japan jumped to a 15-year high. Shares in Asia were broadly lower, except for Japan's Nikkei gauge, which got a boost from a weaker yen.

Central bankers around the globe have maintained a hawkish tone as rising oil prices drive inflation. Federal Reserve Governor Michael Barr on Wednesday signalled more interest rate hikes may be needed, and markets are anticipating speeches from other Fed officials on Thursday, including New York Fed President John Williams and Cleveland Fed President Beth Hammack.

On the economic data front, the US Labor Department is expected to report that initial jobless claims likely rose to 201,000 in the week ended September 19, while continuing claims likely increased by 15,000 to 1.745 million in the previous week. New US home sales are forecast to edge up to 615,000 units in August from 607,000 units in July.

The pan-region Euro Stoxx 50 futures fell 0.43% to 6,298, German DAX futures were down 0.43% at 25,501, and FTSE futures edged 0.3% lower to 10,744.5. US stock futures, the S&P 500 e-minis, were down 0.19% at 7,757.8.

Key developments that could influence markets on Thursday:

- France business climate and consumer confidence data for September

- Germany Ifo data for September

- United Kingdom GfK/NIM consumer confidence data for September

(Editing by Jacqueline Wong)