Global Stocks Drop to One-Week Low, Oil Rallies: Markets Wrap

(Bloomberg) — Global equities slid to a one-week low as surging oil prices and mounting bets on further Federal Reserve interest-rate hikes drove Treasury yields to multi-year highs.

MSCI’s All Country World Index, a key barometer of global equities, dropped 0.2% to its lowest since Sept. 18 as Asian shares fell 1%. Futures on the Nasdaq 100 Index slipped 0.5%, pointing to further losses on Wall Street after Monday’s tech-led decline. Europe was set for a tepid open.

Treasuries stabilized in Asia after tumbling in the New York session. The US 10-year yield rose one basis point to 5.25% after climbing to the highest since 2007 on Monday. The 30-year yield added one basis point to 5.56%, while the dollar edged higher against most of its major peers.

Weighing on sentiment was Brent crude, which climbed for a second day as optimism for an imminent diplomatic breakthrough in the Middle East faded. The commodity gained 1.8% to $107.15 a barrel.

Climbing oil prices, stronger US business activity and concerns over elevated government debt have fueled the biggest Treasury selloff since President Donald Trump’s April 2025 tariff rollout. The surge in yields is starting to pressure stocks as higher borrowing costs cloud the outlook for economic growth and corporate earnings.

“The broader market hasn’t been able to gain much traction because of rising yields and oil prices,” said Chris Larkin at E*Trade from Morgan Stanley. “With the Fed focused on the inflation side of its mandate, unless this week’s labor-market data is a major surprise, it will likely play second fiddle to interest rates and energy.”

What Bloomberg Strategists Say…

“The duration stress that’s building in bond markets is boosting demand for oil as an inflation hedge, which risks sending both yields and oil prices into an upward spiral. Traditionally, moves in oil tend to influence inflation expectations and rates. But the latest cross-asset signals increasingly suggest rates are leading crude prices.”

— Frank Monkam, Markets Live strategist. Click here for a full analysis.

In other corners of the market, gold rose 0.6% to $4,140 an ounce after slumping almost 4% on Monday. Silver steadied around $60.75 an ounce.

Chinese shares were little changed after the country gave its strongest signal yet that it will move with greater urgency to counter a deepening slowdown, as the government promised to introduce new measures to support the economy. A gauge of mainland China equities touched a one-year low on Monday.

Shares in Japan dropped over 1%, as more than half of the stocks in the Topix index went ex-dividend.

In Australia, the currency slipped after the central bank said it considered pausing policy tightening on Tuesday. Earlier, the RBA raised its target rate by 25 basis points as expected.

Traders will be watching a packed slate of US economic data this week for signs the economy remains strong enough to support further Fed tightening. Consumer confidence and August JOLTS figures are due Tuesday, followed by consumer-spending and inflation data and then payrolls on Friday.

Meanwhile, some investors have turned bullish after the recent selloff in bonds.

Long-time bond investor Chris Iggo is retiring with a parting message for markets: after four difficult years, bonds are set for a rebound. Jim Bianco, a Wall Street veteran, is turning bullish on US Treasuries for the first time in six years.

“This is a value play,” said Bianco, president and founder of Chicago-based Bianco Research. “If we start to see yields going higher, I’m going to continue to get in.”

Corporate Highlights:

Goldman Sachs Group Inc.’s board has discussed a plan where Waldron, who is currently chief operating officer, would succeed David Solomon as CEO as early as next year, the Wall Street Journal reported. Julius Baer Group Ltd. said the Swiss regulator Finma has ended its enforcement procedure against the bank and it has submitted a share buyback request. Anthropic reported a net loss of $42 billion in 2025, ‌and plans to spend $518 billion on cloud, computing and infrastructure obligations in the coming years, Reuters reported, citing its IPO prospectus. OpenAI canceled plans to release its latest artificial intelligence model after researchers discovered safety risks during testing, according to the Wall Street Journal. Chipmaker Advanced Micro Devices Inc. agreed to acquire World Labs for $8.2 billion, gaining an artificial intelligence startup founded by industry pioneer and researcher Fei-Fei Li. Chocoladefabriken Lindt & Spruengli AG cut its sales-growth guidance for a second time this year citing weak demand in key markets and subdued consumer sentiment.

Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.3% as of 6:50 a.m. London time Nasdaq 100 futures fell 0.5% The MSCI Asia Pacific Index fell 1% The MSCI Emerging Markets Index fell 0.6% Japan’s Topix fell 2% Australia’s S&P/ASX 200 rose 0.1% Hong Kong’s Hang Seng fell 0.7% The Shanghai Composite was little changed Euro Stoxx 50 futures rose 0.1% Currencies

The Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.1% to $1.1355 The Japanese yen was unchanged at 157.39 per dollar The offshore yuan was little changed at 6.7092 per dollar The British pound fell 0.2% to $1.3231 Cryptocurrencies

Bitcoin fell 0.2% to $83,327.48 Ether fell 0.4% to $2,671.24 Bonds

The yield on 10-year Treasuries advanced one basis point to 5.25% Japan’s 10-year yield was unchanged at 3.090% Australia’s 10-year yield declined three basis points to 5.39% Commodities

Spot gold rose 0.5% to $4,137.13 an ounce West Texas Intermediate crude rose 1.6% to $94.10 a barrel This story was produced with the assistance of Bloomberg Automation.

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