Global stock markets came under pressure in Thursday trading after the 10-year U.S. Treasury yield rose to 5.16%, surpassing the previous session’s level of 5.11% and reaching levels not seen since 2007, as Brent crude simultaneously topped $100 a barrel.
Bond yields weigh on Wall Street
Wall Street’s three major indexes ended the session mixed. The Dow Jones Industrial Average fell 0.31%, the S&P 500 declined 0.02%, while the Nasdaq Composite edged up 0.01%.
Yields rose as U.S. economic data remained strong. Data released on Wednesday showed business activity accelerating, while Thursday’s figures showed a decline in weekly jobless claims. The indicators bolstered investors’ expectations that the Federal Reserve could continue raising interest rates after lifting them last week for the first time in three years.
Traders now see a probability of more than 50% that interest rates will be raised twice more by the end of the year, according to CME Group data. Higher yields weigh on stock valuations, particularly those of technology and artificial-intelligence companies, while also increasing the cost of financing major investments in data centers. Nvidia shares fell about 0.8% in trading.
Brent tops $100 as inflation concerns mount
Pressure on markets intensified as oil prices rose amid continuing tensions in the Middle East. Brent crude topped $100 a barrel in Thursday trading, heightening fears that inflationary pressures and tighter monetary policy could persist.
The average price of a gallon of regular gasoline in the United States rose to $4.48, compared with less than $4.10 a month ago and $3.16 a year ago, according to the American Automobile Association.
European losses and mixed performance in Asia
Losses spread to European markets, with the Euro Stoxx 50 falling about 0.4%, Germany’s DAX declining 0.6% and France’s CAC 40 dropping 0.5%, while the UK’s FTSE 100 lost 0.24%.
The decline in British stocks coincided with a rise in the 10-year government bond yield to 5.38%, its highest level in more than a week. Expectations of a Bank of England rate hike also increased after officials indicated that further tightening could be needed if pressure from energy prices and inflation persisted.
In Asia, Japanese stocks bucked the broader trend, with the Nikkei 225 ending the session up about 0.9%, supported by gains in the real estate, banking and textiles sectors. In contrast, Hong Kong’s Hang Seng Index fell about 0.3%, while China’s CSI 300 declined 1.7%.
Moves in Asian markets came as investors awaited the outcome of a summit in Washington between U.S. President Donald Trump and his Chinese counterpart, Xi Jinping, with attention focused on the future of trade and technology relations between the world’s two largest economies.
