Global Markets Retreat as U.S. Stocks Fall on Rising Yields
Shares in Asia retreated on Thursday as U.S. stocks fell under the pressure of higher yields in the bond market, with the Dow Jones Industrial Average dropping more than 400 points.
In Tokyo, the Nikkei 225 benchmark shed 1.5% to 37,980.55, while the Hang Seng in Hong Kong declined 0.6% to 18,362.23. The Shanghai Composite index edged slightly higher to 3,113.06, and Australia’s S&P/ASX 200 slipped 0.4% to 7,632.10. The Kospi in Seoul sank 0.9% to 2,652.98, and Taiwan’s Taiex lost 0.8%.
According to Mizuho Bank, global inflation that is hotter and stickier than expected is impacting asset markets, leading to concerns about adverse demand effects from higher rates.
On Wednesday, the S&P 500 dipped 0.7% to 5,266.95, with four out of every five stocks in the index dropping. The Dow industrials lost 1.1% to 38,441.54, and the Nasdaq composite slipped 0.6% to 16,920.58 after reaching its latest all-time high.
American Airlines Group led a slump in airline stocks after cutting its profit forecast and other financial targets for the spring. ConocoPhillips fell 3.1% after announcing a deal to buy Marathon Oil in an all-stock transaction valued at $22.5 billion. Advance Auto Parts sank 11% after falling short of analysts’ expectations.
The stock market was also weighed down by a climb in longer-term Treasury yields, with the 10-year yield rising to 4.61% following an auction of seven-year Treasurys.
Traders are recalibrating their expectations for when the Federal Reserve might begin cutting its main interest rate, as inflation remains high. The Fed is trying to balance controlling inflation with avoiding widespread layoffs.
Despite concerns about consumer spending, economists expect a healthy job market and gains in cryptocurrencies to support the economy. U.S. stocks have been setting records, with technology stocks like Nvidia driving the frenzy higher.
On Wall Street, Dick’s Sporting Goods jumped 15.9% after beating profit and revenue expectations, while Chewy saw its stock rise 27.1% after reporting stronger-than-expected profit.
In the oil market, U.S. benchmark crude oil added 11 cents to $79.34 per barrel, while Brent crude was up 8 cents at $83.51 per barrel. The U.S. dollar slipped against the Japanese yen and the euro.
Overall, the global markets are facing volatility due to concerns about inflation, interest rates, and consumer spending. Traders are closely watching developments in the bond market and the Federal Reserve’s actions to gauge the future direction of the markets.