Elaine Kurtenbach, The Associated PressThank you for reading this post, don't forget to subscribe!
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A man rides a bicycle past the New York Stock Exchange in New York on Tuesday, September 13, 2022. (AP Photo/Julia Nikhinson)
BANGKOK (AP) — Shares in Europe and Asia fell Thursday, following a slide on Wall Street as bond yields tightened their grip.
Germany’s DAX fell 1.1% to 14,722.60 and the CAC 40 in Paris fell 0.8% to 6,860.72. Britain’s FTSE 100 was down 0.7% at 7,361.04.
S&P 500 futures fell 0.7% and the Dow Jones Industrial Average was down 0.2%. on Wednesday,
On Wednesday, the S&P 500 fell 1.4%, falling back to where it was in May. Some of the heaviest losses hit Big Tech stocks, which dragged the Nasdaq Composite to its second-worst decline of the year. It gave up 2.4%. The Dow industrials fell 0.3%.
The yield on the 10-year Treasury has moved back toward 5%. It stood at 4.95% early Thursday after falling to 4.82% late Tuesday.
In Asian trading, Tokyo’s Nikkei 225 fell 2.1% to 30,601.78 and the Kospi in Seoul fell 2.7% to 2,309.14.
Hong Kong’s Hang Seng fell 0.8% to 16,942.93, while the Shanghai Composite Index recovered 0.5% to 2,988.30, recovering from early losses.
Sydney’s S&P/ASX 200 fell 0.6% to 6,812.30. The SET in Bangkok fell 1.4%, while Taiwan’s Taiex fell 1.7%.
Steeply rising Treasury yields have been dragging down the stock market since the summer. The 10-year yield is matching the Federal Reserve’s key interest rate, which is above 5.25% and at its highest level since 2001 as the central bank tries to get inflation under control.
Higher yields drive down the prices of stocks and other investments while slowing the overall economy and increasing pressure on the financial system. They have the biggest impact on stocks that are considered expensive or those whose investors have had to wait the longest for big growth. It focuses on Internet-related, technology and other high-growth stocks. Sharp declines of 5.6% for Amazon, 4.3% for Nvidia and 1.3% for Apple were the heaviest declines on the S&P 500 on Wednesday.
The parent company of Google and YouTube posted stronger-than-expected profit, yet Alphabet underperformed the market. Its stock fell 9.5% on concerns of a slowdown in growth of its cloud-computing business.
Microsoft was in a standout position and rose 3.1% after reporting stronger profits and revenue than analysts expected over the summer. Its activities have additional weight on the market as it is the second largest company by market value.
Higher interest rates and yields have already caused pain on the housing market, where mortgage rates have reached their highest level since 2000. The Fed’s hope is to control the economy enough to reduce inflation, but not so much that it causes a deep recession.
Preliminary US economic growth data for July-September is due on Thursday.
In the oil market, U.S. benchmark crude fell 15 cents to $85.24 a barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, a barrel of US crude increased by $ 1.65 and closed at $ 85.39.
Brent crude, the international benchmark, fell 16 cents to $88.96 a barrel. On Wednesday it jumped by $2.06 to reach $90.13 per barrel.
US oil rose above $93 last month, and has bounced up and down since then, amid concerns that the latest Israel-Hamas war could disrupt supplies from Iran or other big oil-producing countries.
In currency trading, the US dollar rose to 150.45 JPY from 150.23 yen on expectations that Japan’s central bank will not change its long-standing near-zero interest rate stance at a policy meeting next week.
The gap between the minus 0.1% Japanese benchmark rate and much higher rates in the US and elsewhere has pushed the dollar’s value sharply higher against the yen. To some extent, this is a boon for export manufacturers who book huge profits in yen in their home countries, but it reduces the purchasing power of the currency for imports.
The euro weakened to $1.0551 from $1.0568.