Stocks fall as rising bond yields worry investors: Markets Wrap

by Andre Janse van Vuuren and Margaryta Kirakosian

Stocks fell alongside bonds, driven by concerns over government finances and lingering inflation risks at a time when equities are hovering near all-time highs.

Futures for the S&P 500 retreated 0.5% as Wall Street returned from a long weekend. Nvidia Corp. led premarket losses among the Magnificent Seven, falling 1.2%. The dollar rose 0.6%, heading for its first advance in six days. Gold hit an all-time high, briefly topping $3,500 an ounce.

Global bonds staged a broad retreat, with the yield on 30-year Treasuries climbing five basis points to 4.98%. Their UK counterparts hit the highest since 1998 amid Prime Minister Keir Starmer’s struggle to restore market confidence. The pound fell more than 1%.

This year’s record-breaking stock rally enters a decisive stretch, with markets about to see whether bets on the first Federal Reserve rate cut of 2025 will play out this month and whether expectations for further easing remain intact. Adding to the pressure are tariff tensions and concerns that President Donald Trump’s attacks on the Fed could stoke inflation.

“I think the long end of the curve should continue to rise because we have big fiscal deficits that need to be funded,” David Zahn, head of European fixed income at Franklin Templeton, told Bloomberg TV. “And how is that going to be done? It will have to be termed out.”

A raft of data is due this week, starting with the Institute for Supply Management’s August surveys of manufacturers and service providers on Tuesday. Friday’s nonfarm payrolls report is expected to show a fourth straight month of sub-100,000 job growth, the weakest stretch since the onset of the pandemic in 2020.

Swaps currently imply a 90% chance of a quarter-point Fed rate cut later this month, with three more similar moves expected by June.

“There’s a lot of caution around moving closer to key US inflation and labor market data,” said Andrea Tueni, head of sales trading at Saxo Banque France. “That warrants some prudence moving forward.”

Corporate News:

• Banca Monte dei Paschi di Siena SpA added as much as €750 million ($877 million) in cash to its bid for Mediobanca SpA and lowered the acceptance threshold, closing in on a plan to create Italy’s third-largest bank.
• Nestlé SA dismissed Chief Executive Officer Laurent Freixe after only a year due to an undisclosed workplace affair, extending the management turmoil at the world’s biggest food company that’s known for its conservative corporate culture. The shares fell.
• SMG Swiss Marketplace Group AG announced plans to list on the SIX Swiss Exchange, which would mark Switzerland’s first substantial offering in more than a year.
• Deutsche Bank AG has regained its spot in the euro area’s main stock benchmark, seven years after being cast out of the gauge.
• Takeshi Niinami, a corporate maverick who seldom missed a chance to poke at Japan’s business establishment, has resigned as Suntory Holdings Inc.’s chief executive officer after his home was searched for illegal drugs.
• Tesla Inc.’s long-awaited entry into India has delivered underwhelming results so far, with tepid bookings fueling fresh doubts about the company’s global growth outlook. Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 fell 0.6% as of 10:49 a.m. London time
• S&P 500 futures fell 0.5%
• Nasdaq 100 futures fell 0.7%
• Futures on the Dow Jones Industrial Average fell 0.4%
• The MSCI Asia Pacific Index fell 0.3%
• The MSCI Emerging Markets Index fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index rose 0.6%
• The euro fell 0.7% to $1.1632
• The Japanese yen fell 0.9% to 148.54 per dollar
• The offshore yuan fell 0.2% to 7.1458 per dollar
• The British pound fell 1.1% to $1.3397

Cryptocurrencies

• Bitcoin rose 1.4% to $110,345.72
• Ether rose 2.5% to $4,394.93

Bonds

• The yield on 10-year Treasuries advanced six basis points to 4.28%
• Germany’s 10-year yield advanced four basis points to 2.78%
• Britain’s 10-year yield advanced four basis points to 4.79%

Commodities

• Brent crude rose 1.7% to $69.31 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

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