Global Stock Markets Retreat as Bond Yields Rise
Stock markets in Europe and Asia took a hit on Wednesday as a rise in bond yields added pressure on stocks. In early trading, France’s CAC 40 slipped 0.7%, Germany’s DAX declined 0.4%, and Britain’s FTSE 100 edged nearly 0.2% lower. The future for the S&P 500 was down 0.6% while that for the Dow Jones Industrial Average slipped 0.5%.
In Asian trading, Japan’s benchmark Nikkei 225 shed 0.8%, Australia’s S&P/ASX 200 dipped 1.3%, and South Korea’s Kospi lost 1.7%. Hong Kong’s Hang Seng slipped 1.8%, while the Shanghai Composite was little changed.
The International Monetary Fund raised its forecast for China’s economic outlook, expecting the No. 2 economy to grow at a 5% annual pace this year. However, the IMF also warned that consumer-friendly reforms are needed to sustain strong, high-quality growth.
Strong spending by U.S. consumers has been a key factor in the economy’s resilience, but some cracks have begun to show, particularly among lower-income households struggling with high inflation. The Federal Reserve has been holding interest rates at the highest level in over two decades to combat inflation, but the balance between controlling inflation and supporting the job market remains delicate.
A rise in bond yields has weighed on share prices, making payments for mortgages and credit cards more expensive. On Tuesday, the S&P 500 closed just below its record set a week ago, while the Dow Jones Industrial Average fell 0.6% and the Nasdaq composite reached another all-time high.
This week’s reports, including consumer confidence and household spending data, could influence the Fed’s decisions. The government’s monthly report on household spending and incomes, along with inflation data for April, will be closely watched.
In other trading, benchmark U.S. crude rose to $80.55 a barrel, while Brent crude reached $84.96 a barrel. In currency trading, the U.S. dollar was unchanged against the Japanese yen and the euro.
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