Treasury yield concerns weigh on US equities as Asian markets rebound

US equities closed lower on Thursday as investors questioned whether the US Treasury’s expanded buyback programme would provide lasting relief for longer-dated borrowing costs, while higher energy prices renewed inflation concerns. The S&P 500 fell 0.90%, the Nasdaq declined 0.70% and the Dow Jones Industrial Average shed 704 points. Financials were mostly lower, while artificial intelligence-related shares also came under pressure following softer results from OpenAI. Walmart fell 9.10% after second-quarter sales missed expectations.

US Treasury yields rose sharply, with the 30-year yield climbing 7 basis points to 5.26% and the 10-year yield reaching 4.71%. Investors remained concerned about large fiscal deficits, persistent inflation and heavy borrowing needs, while higher oil prices added to inflation risks. The Treasury’s plan to more than double purchases of 10-, 20- and 30-year debt was intended to support longer-dated markets, although the move has so far provided only limited relief. The US dollar also weakened, while investors continued to assess the outlook for inflation and interest rates.

European markets were mixed. The Euro STOXX 50 fell 0.20%, while the STOXX Europe 600 edged lower. Germany’s DAX 40 declined 0.40% to 25 983, while France’s CAC 40 fell 0.60% to 8 453, extending its losing streak to eight sessions. London’s FTSE 100 advanced, supported by gains in mining and energy shares, with BP and Shell rising as oil prices moved higher.

Asian markets rebounded as global bond yields pulled back from recent highs following the Treasury’s announcement. South Korea’s KOSPI surged around 6% as chipmakers recovered, while Japan’s Nikkei 225 rose 1.36%. China’s Shanghai Composite gained 0.24% and the Shenzhen Component increased 0.59% after the People’s Bank of China kept its benchmark lending rates unchanged.

South African equities ended lower on Thursday. The FTSE/JSE All Share Index declined 0.34% to 115 959.23 points, while the Top 40 Index fell 0.29%. Resources gained 1.53% and Metals and Mining advanced 2%, while Industrials 25 declined 1.27% and financials fell 1.44%. The rand weakened 0.26% against the US dollar to R16.14, 0.44% against the British pound to R21.99 and 0.26% against the euro to R18.84. South Africa’s 10-year government bond yield climbed to around 8.75%, its highest level since 30 July.

Commodity markets were higher. Brent crude oil rose 2.03% to $93.48 per barrel as the Iran conflict continued to raise concerns around energy supply disruptions. Gold edged 0.07% lower to $4 518.34 per ounce, while silver gained 1.95% to $68.24 per ounce and platinum advanced 1.31% to $1 834.60 per ounce.