Jump in US yields puts pressure on equity markets

The S&P 500 fell Thursday breaking an eight day winning streak as rising yields shook investor confidence.

The benchmark index was trading down 0.8 per cent, while the Nasdaq was 0.9 per cent weaker. The Dow Jones Industrial Average was 0.7 per cent lower.

All S&P sectors were trading in negative territory, with the worst performing sectors including Healthcare down 2.1 per cent, Consumer Discretionary down 1.8 per cent and Real Estate down 1.5 per cent. The best performing sectors included Industrials down 0.25 per cent and Energy down 0.27 per cent.

Stocks hit session lows after Federal Reserve Chair Jerome Powell indicated more work may need to be done to bring down inflation, although the recent slowdown in pace has been an encouraging sign for policymakers.

The move lower in stocks also coincided with an uptick in yields. A U.S. Treasury auction earlier in the session also contributed to that. The benchmark 10-year Treasury yield was up more than 12 basis points at 4.632 per cent. The 30-year bond rate jumped 11 basis points to 4.772 per cent.

In company news Disney rose 6.9 per cent after reporting better-than-expected profit and expanding its cost-cutting plan, while Arm dipped 5.2 per cent following its first quarterly report as a public company. MGM Resorts dipped about 1.1 per cent even after posting strong results and a new share buyback program.

Shares in Telsa tumbled after HSBC initiated coverage of the EV maker with a “reduce” rating. Nvidia rallied after a Chinese report that the company plans to release three new artificial intelligence chips for China.

Oil edged higher as Saudi Arabia’s energy minister on Thursday said oil consumption remains healthy and blamed speculators for the recent drop in prices. Markets are increasingly of the view that Saudi Arabia will extend its unilateral 1 mb/d cut well into 1Q′24.

Iron ore traded in Singapore closed above $US125 a tonne. The outlook for the steel-making material has improved as China continues to indicate it is moving to stabilise the real estate sector.

Futures

The SPI futures are pointing to a 0.1 per cent fall

Currency

One Australian dollar at 8:30 AM was buying 63.68 US cents.

Commodities

Gold added 0.28 per cent. Silver fell 0.19 per cent. Copper lost 0.18 per cent. Oil added 0.27 per cent.

Figures around the globe

European markets closed higher. London’s FTSE gained 0.73 per cent, Frankfurt added 0.81 per cent, and Paris closed 1.13 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei gained 1.49 per cent, Hong Kong’s Hang Seng fell 0.33 per cent while China’s Shanghai Composite closed 0.03 per cent higher.

The Australian share market closed 0.28 per cent higher at 7015.

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