Elaine Kurtenbach, The Associated Press
47 minutes ago
People pass by the New York Stock Exchange, Wednesday, May 29, 2024, in New York. Wall Street was poised to open with losses as a few major trades and a few earnings reports fill the news void until Friday’s latest inflation report. (AP Photo/Peter Morgan, File)
European shares opened higher on Thursday after losses in Asia as rising bond yields weighed on stocks.
Germany’s DAX index rose 0.1% to 18,486.92, while Paris’ CAC 40 index added 0.3% to 7,956.50. Britain’s FTSE index rose 0.3% to 8,204.61.
Futures for the S&P 500 fell 0.4%, while the Dow Jones Industrial Average lost 0.8%.
With little data released this week, the biggest drag on stocks has been rising bond yields. The 10-year Treasury yield rose to 4.62% by early Thursday morning from 4.54% late Tuesday following the auction of $44 billion in seven-year Treasury notes.
The yield on the 10-year Treasury note has been creeping up since dropping below 4.40% in mid-May. Rising Treasury yields drive down the prices of all kinds of investments.
Asian shares tracked losses on Wall Street, with the Nikkei average in Tokyo dropping 1.3 percent to close at 38,054.13.
Hong Kong’s Hang Seng Index fell 1.3% to 18,230.19.
The Shanghai Composite Index gave up early gains, falling 0.6% to 3,091.68.
Australia’s S&P/ASX 200 lost 0.5% to 7,628.20 and Seoul’s KOSPI lost 1.6% to 2,635.44.
Taiwan’s Taiex fell 1.4 percent and India’s Sensex dropped 0.7 percent.
The swings in bond yields this month came as traders recalibrated expectations about when the Federal Reserve will start cutting its key interest rate, which is at its highest in more than two decades.
Stubbornly high inflation has forced traders to postpone overly optimistic predictions about rate cuts multiple times this year.
“More-than-expected and robust global inflation appears to be draining asset markets’ energy,” Mizuho Bank said in a commentary. “In other words, the ‘Goldilocks’ streak is crumbling. Concerns are also spreading about the negative impact of rising interest rates on demand.”
The S&P 500 fell 0.7% on Wednesday, paring a May gain that was on track to be its best month since November. Four of the index’s five components were down.
The Dow Jones Industrial Average fell 1.1%, and the Nasdaq Composite Index dropped 0.6%.
The Fed is trying to strike a balance between squeezing the economy with interest rates high enough to completely contain inflation, but not so much that it leads to widespread layoffs.
U.S. stocks continue to hit record highs despite concerns about interest rates remaining high, in part because artificial intelligence technology stocks continue to rally. Nvidia’s latest eye-popping earnings report helped add to the enthusiasm. The company fell briefly in morning trading but ended Thursday up 0.8%, its most modest gain since the earnings report.
Benchmark U.S. crude oil rose 1 cent to $79.22 a barrel in electronic trading on the New York Mercantile Exchange early Thursday.
Brent crude, the international standard, fell 5 cents to $83.38 a barrel.
The U.S. dollar fell to 156.93 yen from 157.65 yen. The euro rose to 1.0818 dollars from 1.0803 dollars.
