Oil rebound and higher yields weigh on global markets

US stock indices ended the day lower on Wednesday as strong economic data, higher oil prices and a weak Treasury auction pushed bond yields higher. The S&P 500 lost 0.70%, the Dow Jones Industrial Average fell 351 points and the Nasdaq 100 declined by 0.80% from its record high. The US 10-year Treasury yield rose as much as 16 basis points (bps) to above 5.12%, its highest since 2007, after S&P Global PMI data showed strong private-sector activity and accelerating input and output price inflation. Alphabet fell 3.80%, Oracle 3.10% and Amazon 2.20%, while Nvidia, Broadcom and Micron declined 1.50%, 2.60% and 2.20%, respectively. Their losses come as credit-sensitive artificial intelligence hyperscalers undergo record levels of debt issuance.

Oil prices rebounded after five consecutive sessions of losses as uncertainty persisted over progress in US-Iran talks. Crude oil rose above $92.50 a barrel, while Brent crude climbed above $103 a barrel as diplomatic efforts remained uncertain. Saudi Arabia’s partial restoration of its East-West pipeline helped offset some supply concerns, while Iran indicated that it could reopen the Strait of Hormuz if US military pressure and restrictions on Iranian ports were eased.

European equities also closed lower as sovereign yields surged amid stronger economic growth and higher energy prices. The Euro STOXX 50 moved 0.40% lower to 6 300 and the STOXX Europe 600 fell 0.30% to 640.7. Germany’s DAX 40 declined 0.70% to 25 411, France’s CAC 40 lost 0.40% to 8 123, while the FTSE 100 bucked the European trend and edged higher, supported by energy shares. The euro extended its decline below $1.14 to a near two-month low as a stronger dollar and expectations of further monetary tightening weighed on the currency.

Asian markets were cautious ahead of the Trump-Xi summit, with the Shanghai Composite falling 0.39% to 3 936.5 and the Hang Seng Index declining 1% to 24 834. Japanese markets remained closed for national holidays, while the yen weakened to around 157.6 per dollar. The currency remained under pressure from a stronger dollar and concerns over possible intervention by policymakers, with the extended holiday contributing to thin market liquidity.

South African markets declined, with the JSE All Share Index falling 1.57% to 111 564.58. Resources declined 1.95%, industrials fell 2.08% and financials lost 1.03%. The rand weakened against the dollar, euro and the pound, trading at around R16.38, R18.67 and R21.72, respectively. The 10-year government bond yield climbed to near 8.90%, its highest since mid-September, as oil prices rose and markets priced in further policy tightening.

The South African Reserve Bank (SARB) raised its repo rate by 25 bps to 7.25% on Wednesday, with the decision unanimous. The move reflected upside risks to inflation and downside risks to growth, while the SARB revised its 2026 growth forecast to 1.20% from 1.40%. Annual consumer inflation edged up to 4.40% in August from 4.30% in July, although it remained below the 4.50% forecast.

Precious metals declined, with gold falling 1.57% to $4 286.68 an ounce, while silver and platinum fell 3.64% and 3.82%, respectively.