Stocks Fall as Oil Gains Fuel Further Bond Selling: Markets Wrap
(Bloomberg) — Stocks fell as rebounding oil prices fueled further selling in bonds and added to the case for interest rates staying higher for longer.
The S&P 500 was poised to give back most of its early-week advance as futures dropped 0.6%. Nasdaq 100 contracts slid 1%. The selloff in Treasuries continued at the longer end, with 30-year yields up three basis points to hit a 2004 high. Brent rose above $105 a barrel. The dollar headed for its longest winning streak since May.
This week’s artificial-intelligence-fueled rally in stocks that drove the Nasdaq 100 to a record high is petering out amid growing concern that elevated bond yields are eroding the relative appeal of equities and pressuring valuations. The selloff in bonds followed another bout of anxiety over stubborn inflation, strong growth and mounting fiscal risks.
“My base case is not that higher yields trigger a broad equity bear market, but they are likely to cap valuation expansion and make earnings growth increasingly important,” said Simon Wiersma at ING Bank. “The key question is whether yields are rising because growth remains strong or because investors demand compensation for inflation and fiscal risks.”
Brent rose after an Iranian official said Tehran’s war with the US may extend to the Indian Ocean or elsewhere.
Building optimism that the two sides may reach a settlement that would help normalize flows through the Strait of Hormuz has taken a knock over the past two days amid aggressive rhetoric from President Donald Trump and defiance from his Iranian counterpart at the United Nations.
“Oil prices remain the key driver overall,” said Nadege Dufosse, head of multi-asset at Candriam. “Investors are flying blind as it’s impossible to guess which way the talks between Iran and the US will go.”
The rout in bonds swept into Asia on Thursday, with yields in Japan, Australia and New Zealand climbing by more than 10 basis points. Equity benchmarks for Asia and Europe headed for back-to-back losses.
Fresh warnings about persistent price pressures emerged from two rate decisions in Europe. The Swiss National Bank raised its inflation forecast as it dialed down its threat of intervention to support the franc. Norges Bank increased borrowing costs for a second time this year and said it was primed to hike again.
The sharp rise in yields has refocused attention on the Federal Reserve’s rate path. Swaps now fully reflect three quarter-point hikes over the next year, with significant hedging for a fourth.
“Eventually rising yields must take a toll on stock markets since they push the cost of capital and the discount rate for future cash flows higher,” said Joachim Klement at Panmure Liberum.
What Bloomberg Strategists Say:
“The surge in Treasury yields has left investors with few places to hide, with global bonds, stocks and gold all falling together. And while bonds from New Zealand to Japan to Australia have all been hammered, investors are exercising plenty of discrimination when it comes to the scale of selling. With the European Central Bank having demonstrated its willingness to take aggressive policy action, bunds represent the best of a much-shunned lot.”
— Ven Ram, cross-asset strategist. For the full note, click here.
Corporate News:
Meta Platforms Inc. unveiled a palm-sized, dedicated gadget for using Muse, the company’s popular new artificial intelligence assistant, pushing deeper into the AI devices market with a surprise announcement. An OpenAI model hacked an Australian government website earlier this year, marking one of the first known cyberattacks by artificial intelligence on a government database. H&M reported better-than-expected earnings as improved margins and refunds of US tariffs helped the Swedish fashion retailer offset a modest growth in sales. Schneider Electric SE agreed to acquire Shelly Group SE, a maker of smart devices for the home, in a deal that values the Bulgarian company at around €1.2 billion ($1.4 billion) excluding debt. A consortium backed by BlackRock Inc. and IFM Investors Pty has entered exclusive talks for a potential acquisition of Stack Infrastructure Inc.’s Asia Pacific data centers, people familiar with the matter said. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.3% as of 10:21 a.m. London time S&P 500 futures fell 0.6% Nasdaq 100 futures fell 1% Futures on the Dow Jones Industrial Average fell 0.3% The MSCI Asia Pacific Index fell 0.9% The MSCI Emerging Markets Index fell 0.9% Currencies
The Bloomberg Dollar Spot Index rose 0.1% The euro was little changed at $1.1377 The Japanese yen fell 0.2% to 158.65 per dollar The offshore yuan was little changed at 6.7149 per dollar The British pound was little changed at $1.3234 Cryptocurrencies
Bitcoin fell 0.9% to $83,479.7 Ether fell 0.4% to $2,660.36 Bonds
The yield on 10-year Treasuries advanced two basis points to 5.14% Germany’s 10-year yield advanced two basis points to 3.58% Britain’s 10-year yield advanced three basis points to 5.37% Commodities
Brent crude rose 2.3% to $105.45 a barrel Spot gold fell 0.5% to $4,264.48 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Julien Ponthus.
©2026 Bloomberg L.P.
