London (AFP) – Stock markets mostly eked out gains while oil prices climbed further Wednesday as higher global bond yields, fuelled by inflation and debt concerns, rattled confidence and took a heavy toll on technology stocks. Global bond yields have surged to multiyear highs in recent days, reigniting wariness about the huge piles of debt AI firms in particular are taking on to develop their models.
On Wall Street, the tech-heavy Nasdaq opened lower and extended losses seen Tuesday, while the Dow and S&P were slightly higher, following the trend in Europe after losses in Asia. South Korea’s Kospi index in particular slumped 5.8 percent as chip titan SK hynix sank almost 10 percent and Samsung nearly eight percent.
Susannah Streeter, chief investment strategist at Wealth Club, said the surge in bond yields was being driven by “concerns about persistent inflation, heavy government borrowing and the sheer scale of debt being issued.” “Higher yields make bonds more attractive relative to shares while also raising borrowing costs and reducing the present value of future corporate profits,” she noted. “The effect is particularly uncomfortable for highly valued technology stocks, where valuations are highly reliant on expectations for future earnings.”
Oil prices continued to rise as the prospect of any Middle East deal dimmed after US President Donald Trump said he would not extend a 60-day truce with Iran. Analysts said US and Iranian officials appear prepared for an extended standoff, dimming hopes for an imminent reopening of the crucial Strait of Hormuz shipping route. That has also stoked inflation expectations that have helped send US government debt costs soaring.
“Persistent inflationary concerns are worsening due to elevated oil prices, which weighs especially on those countries with an extra reliance on energy imports such as the UK and Japan,” said Richard Hunter, head of markets at Interactive Investor. Official data Wednesday showed that UK inflation jumped to 2.9 percent in July, driven by higher energy bills.
After the market close in Asia, SK hynix announced it would buy back a massive $29 billion worth of its shares in a bid to support its stock and settle investor nerves. Elsewhere on the corporate front, US biopharma group Moderna saw its share price nearly double after positive results for a key skin cancer vaccine being developed with Merck. Moderna’s stock was up 107 percent at around $130 in opening deals, while Merck was up over 10 percent at around $150.
– Key figures at around 1345 GMT –
New York – DOW: UP 0.2 percent at 53,466.13 points
New York – S&P 500: UP 0.1 percent at 7,700.81
New York – Nasdaq: DOWN 0.4 percent at 26,190.76
London – FTSE 100: UP 0.2 percent at 10,744.14
Paris – CAC 40: UP 0.1 percent at 8,520.97
Frankfurt – DAX: DOWN 0.2 percent at 26,078.83
Tokyo – Nikkei 225: DOWN 3.2 percent at 65,326.42 (close)
Hong Kong – Hang Seng Index: UP 0.1 percent at 25,495.07 (close)
Shanghai – Composite: DOWN 2.4 percent at 3,894.42 (close)
Brent North Sea Crude: UP 0.5 percent at $91.45 per barrel
West Texas Intermediate: UP 0.5 percent at $84.45 per barrel
Euro/dollar: UP at $1.1651 from $1.1577 on Tuesday
Pound/dollar: UP at $1.3611 from $1.3533
Dollar/yen: DOWN at 158.50 yen from 159.64 yen
Euro/pound: UP at 85.60 pence from 85.53 pence
© 2024 AFP
