MPC Markets Morning Call — 18th September 2026: Post-Fed Relief Rally as Oil and Yields Ease

US equities staged their strongest session since early August on Thursday as markets took a second look at the Fed’s first rate hike in three years and decided the outlook wasn’t so bad. The Dow rose 317.95 points (+0.62%) to 51,779.85, the S&P 500 gained 85.93 (+1.14%) to 7,637.74, and the Nasdaq Composite jumped 439.87 (+1.69%) to 26,418.30. Nine of 11 S&P sectors rose, with tech leading at roughly +2.2% and the SOX chip index surging more than 3%. Financials and consumer staples were the only two sectors in the red. Advancers led decliners about 2.4-to-1 on the NYSE.

The relief rally followed Wednesday’s sharp selloff after Fed Chair Kevin Warsh delivered a unanimous 25bp hike to 3.75–4.00% — the first since 2023. Markets took the classic “buy the rumour, sell the fact” view, with short-covering and profit-taking driving the bounce. Initial jobless claims fell 10,000 to a seasonally adjusted 196,000 — near multi-decade lows — reinforcing Warsh’s line that price stability need not come at the expense of the labour market. Bespoke Investment Group captured the mood: markets “had a chance to sleep on yesterday’s Fed meeting, and on second thought, they like it.”

Among the standout movers, crypto-linked names surged after the SEC unveiled a five-year exemption for tokenised stock trading — Circle +5.8%, Robinhood +5.2%, Coinbase +5.8%. Nvidia gained 2.6% after CEO Jensen Huang said he expects to sell twice as many chips in the coming year, with Bloomberg also reporting a US$2 billion Nvidia commitment to Brookfield’s AI infrastructure fund. On the downside, CoreWeave fell 4.2% on equity and convertible bond fundraising plans, while Fluence Energy plunged 15.4% after cutting its FY2026 revenue guidance.

Brent crude fell $1.01 (−0.95%) to settle at $104.82 and WTI eased 52 cents (−0.5%) to $101.91 — a second consecutive decline after Wednesday’s roughly 3% drop — but both grades remain firmly above $100. The pullback was driven by reports that Saudi Arabia was offering more crude to Asian refiners via ship-to-ship transfers off Oman’s Sohar port, bypassing the disrupted East–West pipeline. Bloomberg also reported Saudi efforts to restore about half of East–West pipeline capacity within days, though three damaged pumping stations carry repair timelines of five to six weeks.

The physical market, however, remains tight. Commodity vessel transits through the Strait of Hormuz dwindled to just three ships on Wednesday — down from 12 the prior day and well below the 10-day average of roughly 17. Saudi–Houthi border strikes continued Thursday, and China privately pressed Iran to rein in Houthis after a Saudi appeal — Tehran’s reply tied regional calm to ending the US–Israeli war on Iran. Average US retail diesel nudged a record near $6.40 per gallon. The oil pullback is relief on Saudi workaround and pipeline repair hopes, not a clean geopolitical de-escalation — the physical market remains fundamentally constrained.

Treasuries rebounded Thursday as oil fell and investors digested the Fed hike. The 10-year yield dropped 5.7bp to 4.947% — having traded above 5% earlier in the week for the first time since 2023 — while the 2-year fell 4.8bp to 4.679% and the 30-year dipped 4.7bp to 5.301%. The 2s/10s spread sat at a positive ~26.6bp. Capital Economics’ Jonas Goltermann warned the Warsh Fed would err hawkishly near term, expecting two more 25bp hikes in December and March with risks skewed to faster and further tightening.

Across the Atlantic, the Bank of England voted 6–3 to hold Bank Rate at 3.75% and announced it would pause active gilt sales for six months, halting sales of long-dated gilts entirely while outlining a plan to run the ~£488–500 billion gilt stock to zero by end-2034. Britain’s 30-year gilt yield tumbled roughly 12bp — its biggest daily fall since May — after touching ~5.95% earlier in the week, the highest since 1998. Governor Bailey warned prolonged Middle East conflict may still require higher borrowing costs, with UK CPI seen rising above 4% in early 2027. Treasury Secretary Scott Bessent’s campaign to tamp down long-dated yields continued in the background, with plans to triple the size of scheduled buybacks of long-dated Treasuries.

The Bank of Japan is expected to raise rates later today — decision due after ~1:30pm AEST. Evercore ISI’s Krishna Guha expects +25bp to 1.25%, while Natixis’ Mabrouk Chetouane expects +25bp to 1.50%, citing Japanese inflation at 1.9% since April. Both anticipate a hawkish signal preparing markets for further increases.

S&P/ASX 200 futures pointed to +54 points / +0.6% at 8,825 near 6:45am AEST on Friday, building on Thursday’s cash close of 8,732.40 (+35.90 / +0.41%). The open sits against overnight US strength (Nasdaq +1.69%, S&P +1.14%, Dow +0.62%) with oil and yields easing. Energy faces a milder crude −1% settle compared to Wednesday’s −3% washout. The Australian dollar gained 0.3% to US71.10¢. Gold rose 1.8% to US$4,341.37/oz. Iron ore firmed 0.5% to US$96.30/t.

The key domestic event this morning is RBA Governor Michele Bullock plus five top officials appearing before the House of Representatives Standing Committee on Economics from 9:30am AEST — the local morning focus ahead of the BoJ decision later in the afternoon. In corporate news, Firmus founders — including Oliver Curtis, Nick Curtis, and Tim Rosenfield, owning almost a quarter of the neocloud company — have laid out a timeline to cash out billion-dollar stakes via a planned ASX float that could value the firm at roughly $50 billion. AFR’s Chanticleer framed Firmus as potentially “Australia’s most capital-hungry beast — bigger than BHP.”

Separately, JPMorgan’s Jason Hunter recommends positioning for more volatility, with S&P 500 support at 7,521–7,620 and resistance at 7,656–7,727. Citadel’s Scott Rubner is “increasingly constructive on what comes next” into Q4 but expects a bumpy immediate period, suggesting month-end weakness could be used to add to core positions. Wall Street Horizon flagged that 19% of September-quarter payout announcements were dividend reductions — the highest share since June 2020 — as Corporate America embraces cash preservation amid AI build-out needs, macro uncertainty and geopolitical tensions.