On Monday, Goldman Sachs adopted a more hawkish stance regarding the Bank of England, expecting to raise interest rates by 25 basis points in November 2026, in light of continued inflation and sustained economic growth.
The bank had previously expected interest rates to remain unchanged throughout 2026, according to Reuters.
Goldman Sachs analysts said in a note: “Recent weeks have witnessed significant increases in wholesale energy prices, an increase in general inflation that exceeded the bank’s expectations, as well as strong growth data.”
The increase in energy prices exacerbated concerns about inflation prospects in Britain, after the price of oil exceeded $100 per barrel due to renewed tensions in the Middle East.
Earlier this month, data showed that the British economy grew in July at its fastest annual pace in 18 months, supported by the artificial intelligence sector and continued momentum as a result of the strong performance in the first half of the year.
In line with prevailing expectations, Goldman Sachs expects the Bank of England to keep the interest rate unchanged at 3.75 percent, during its meeting scheduled for September 17.
The financial services company stated that the Bank of England is likely to hold interest rates steady after raising them in November, as lower energy prices will reduce the need for further monetary tightening, before interest cuts begin in late 2027.
London Stock Exchange Group data showed that traders are currently pricing in the possibility of a 47 basis point interest rate hike by the Bank of England, by the end of the year.
The European Central Bank raised interest rates for the second time this year last week.
Traders are also largely focused on the expected interest rate decisions from the Federal Reserve and the Bank of Japan, later this week.
The Japanese Nikkei index fell on Monday, affected by sharp losses in technology and artificial intelligence stocks, after executives in major companies raised concerns about the safety of artificial intelligence technologies and called for slowing the pace of their development. On the other hand, the broader Topix index rose, while Japanese government bonds remained stable before the upcoming Bank of Japan meeting this week.
The Nikkei fell by 0.81 percent to close at 63,492.99 points, after falling by about two percent during the session. Topix rose 0.74 percent to 4,058.21 points. The main pressure from technology stocks came after Dario Amodei, CEO of Anthropic, called on artificial intelligence companies to slow down the development of modeling capabilities. His position was supported in social media posts by Sam Altman, CEO of OpenAI, Elon Musk, President of XAI, and Demis Hassabis, Head of Google's DeepMind unit.
Altman said, separately, that OpenAI will not go public during 2026, with the company currently focusing on safety issues.
Wataru Akiyama, equity strategist at Nomura Securities, said that these concerns cast a shadow on the expectations of profit growth for companies related to semiconductors and the development of artificial intelligence infrastructure, noting that the decline in the Japanese market was almost entirely concentrated in artificial intelligence and chip stocks.
SoftBank Group shares fell; The main investor in “OpenAI”, by 10.72 percent, recording its largest loss in more than two months. The shares of the chip manufacturing company “Kioxia Holding” fell 6.37 percent, and the shares of “Resonac Holding” lost 5.98 percent.
In contrast, Fujitsu shares rose 7.39 percent, NEC rose 6.90 percent, and Recruit Holdings rose 6.35 percent. The market breadth was positive, as 158 Nikkei component stocks rose, compared to a decline of 66 stocks, but the large weight of technology companies pushed the index to decline.
Chubu Electric Power shares also fell 3.58 percent, after the company announced that its president and chairman of the board of directors had stepped down following an investigation into falsifying seismic data at a nuclear power plant.
In the bond market, trading has largely stabilized with anticipation of the Bank of Japan meeting on September 17 and 18. The benchmark 10-year government bond yield fell 0.5 basis points to 2.980 percent, while the 40-year bond yield fell by the same amount to 4.10 percent. Bond yields for two and five years remained stable.
Markets widely expect the Bank of Japan to raise interest rates by 25 basis points to 1.25 percent, after hawkish signals from Governor Kazuo Ueda and strong inflation data.
Keisuke Tsuruta, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said that speculation about the path of raising interest rates by the Bank of Japan is likely to fluctuate significantly. This makes taking strong investment positions in the government bond market difficult.
Overseas, US Treasury yields fell slightly, with the 10-year bond yield trading near 4.965 percent. Markets are counting on a high possibility that the Federal Reserve will raise interest rates this week after strong US inflation data, while the rise in oil, against the backdrop of Middle East supply risks, has kept inflationary fears high.
Japanese markets are anticipating a busy week of monetary policy decisions, with the meetings of the Bank of Japan and the Federal Reserve, at a time when energy supply disruptions from the Gulf region continue due to the US-Iranian conflict.
The visit of Prince Mohammed bin Salman, Crown Prince and Prime Minister of Saudi Arabia, to Paris pushed the economic and investment relations between Saudi Arabia and France to a new stage, with the acceleration of the implementation of joint projects and the expansion of cooperation in the sectors of transport, logistics, energy and advanced technologies, according to what the French ambassador to Saudi Arabia, Patrick Maisonneuve, confirmed to Asharq Al-Awsat.
The Crown Prince visited Paris on August 24, where he chaired, alongside French President Emmanuel Macron, the first meeting of the Saudi-French Strategic Partnership Council, which constituted a new station in the path of relations between the two countries, and witnessed the announcement of about 20 agreements and memorandums of understanding in a number of fields.
Maisonneuve said that the first meeting of the Saudi-French Strategic Partnership Council, which was held under the chairmanship of the leadership of the two countries in Paris on August 24, established the path of long-term cooperation, pointing to the growth of trade exchange between the two countries by 11 percent during the year 2025, making Saudi Arabia the first trading partner of France in the Near and Middle East.
He added that the aviation sector currently leads French exports to Saudi Arabia, while the list of exports includes various products, including pharmaceutical, food, cosmetics and electrical equipment industries.
Maisonneuve explained that the results of the Crown Prince's visit contributed to advancing economic and investment cooperation between the two countries, while the Strategic Partnership Council became a framework for strengthening economic interdependence between Saudi Arabia and France, and opening new areas of cooperation in sectors related to future transformations.
He pointed out that France currently ranks third among foreign investors in Saudi Arabia, stressing his country's aspiration to strengthen this presence and encourage more French companies to benefit from the opportunities offered by the economic transformation that the Kingdom is witnessing.
In this context, Maisonnave said that expanding credit insurance mechanisms would support the participation of French companies in major strategic projects in Saudi Arabia, to which France aspires to increase its contribution through investment and establishing partnerships, in addition to developing competencies and creating value and job opportunities.
He gave an example of this with the agreement concluded between the CMA CGM Group and the Red Sea Gateway Station to develop and operate the fourth station in the port of Jeddah, considering that the agreement embodies this trend, by combining the experience of a major French group with a global presence and Saudi Arabia’s ambition to strengthen its position as a major logistics center.
He said that the agreement supports this menstruation, given the strategic role that the Kingdom plays in linking Europe, Asia and Africa, a role whose importance clearly emerged during the crisis witnessed in the Strait of Hormuz.
In the urban transport sector, Maisonneuve referred to the contract concluded by Alstom to supply additional metro trains to the city of Riyadh, which in turn reflects benefiting from French expertise in implementing major infrastructure projects in the Kingdom.
On the other hand, Maisonneuve said that cooperation between the two countries is witnessing growth in both directions, pointing to the project that the Qiddiya Company is planning in the field of entertainment in the Paris region, as a “strong signal” of the growing Saudi investments in France, and evidence of confidence in France’s ability to attract such projects.
Maisonneuve said that strengthening the partnership between Saudi Arabia and France in future technologies is a priority, pointing to the announced strategic cooperation between “Human” and “Mistral Artificial Intelligence” as an example of this trend. Cooperation includes developing the infrastructure for artificial intelligence, building advanced models, and publishing solutions designed to meet the needs of the Kingdom, which contributes to the development of high-performance artificial intelligence capabilities, while enhancing the presence of the Arabic language in these technologies.
In the energy sector, the French ambassador stressed that his country is keen to contribute to the stability of global energy markets and enhance security of supplies, noting that Saudi-French cooperation will include oil and petrochemicals, sustainable electricity generation, energy efficiency, renewable energy, energy storage, clean hydrogen, and peaceful nuclear energy.
Maisonneuve pointed out that the results of the French-Saudi round table on investment, which was held in conjunction with the Crown Prince’s visit to Paris, reflected the growing momentum in economic relations between the two countries, as it brought together representatives of the private sector from both sides to discuss investment opportunities in a number of key sectors.
He said that Saudi-French economic relations are now based on mutual investments, long-term projects, and the transfer of expertise in areas of common interest, pointing out that about 20 agreements and memorandums of understanding were announced during the Crown Prince’s visit, reflecting the expanding scope of cooperation between the companies of the two countries and the growing partnerships existing between them.
