U.S. stock futures were lower on Thursday as investors faced more pressure from rising Treasury yields and elevated oil prices.
Dow Jones Industrial Average futures fell 436 points, or 0.9%. S&P 500 futures dipped 0.5%, and Nasdaq-100 futures were 0.7% lower.
The benchmark 10-year Treasury note yield rose 7 basis points to 5.354%, around levels not seen since 2002. The 30-year Treasury bond yield also traded near 24-year highs at 5.726%.Those moves came after Federal Reserve Governor Christopher Waller said more hikes may be needed to curb inflation.
Oil prices spiked also after President Donald Trump said he doesn’t want to make a deal with Iran to end the war, while the U.S. is reportedly preparing for “massive bombing” in the Middle East. Brent crude jumped 5.1% to $105.33 per barrel. WTI futures, meanwhile, advanced 5% to $92.71.
Yields and oil have stoked volatility in equities of late, as concern grows that higher energy prices will keep inflation elevated and force the Federal Reserve to further raise rates.
Many investors are maintaining an optimistic view of the stock market, however. They expect that the start of earnings season could give the market the fuel it needs for the next leg higher.
In the third quarter, the S&P 500 is expected post a blended earnings growth rate of roughly 30%, which would be a third straight quarter of above-25% earnings growth, according to FactSet.
“If earnings remain strong, and the idea is that they probably will, if expectations are met and/or higher, that is going to sustain this rally — despite the fact that rates are higher,” Courtney Garcia, senior wealth advisor at Payne Capital Management, told CNBC’s “Closing Bell.” “It’s not going to derail the market.”
On Thursday, investors will await results from PepsiCo before the open. Traders will also watch for weekly jobless claims data.
Across the Atlantic, the pan-European Stoxx 600 was 0.85% lower in morning trade. The U.K.’s FTSE 100 was 0.44% down, while France’s CAC 40 shed 0.81%. The German DAX dipped 0.77%, as Italy’s FTSE MIB shed 0.98%.
In Asia, Japan’s Nikkei 225 closed 1.42% lower, while South Korea’s Kospi dropped 2.62%. Australia’s benchmark S&P/ASX 200 fell 0.77%, and mainland China’s CSI 300 declined 1.09%.
UBS says stay invested in stocks despite turbulence
“Markets may have to climb a renewed wall of worry to set fresh records, but waiting for these concerns to fade could mean missing further gains. We believe investors should focus less on finding a perfect entry point and more on maintaining exposure while managing concentration and timing risks through a disciplined portfolio approach,” Ulrike Hoffmann-Burchardi, CIO of the Americas at UBS, said in a note.
— Fred Imbert
Treasury yields rise as Fed’s Waller says more hikes needed, investors await 30-year auction
U.S. Treasury yields climbed higher on Thursday ahead of a closely watched long-dated bond auction later.
The benchmark 10-year Treasury yield was 4 basis points higher at 5.322%, after reaching its highest level since 2002 on Wednesday before retreating later in the day. The 30-year Treasury bond yield rose over 4 basis points to 5.705%, after trading just below a 24-year high in the previous session. The 2-year Treasury note yield was nearly 3 basis points up to 4.793%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
Asia-Pacific markets fall as oil gains on Mideast worries
Asia markets closed lower Thursday, with Japan’s Nikkei 225 ending 1.42% lower at 69,042.11, and the broader Topix dropping 1.51% to 4,091.46.
South Korea’s Kospi fell 2.62% to 6,625.93, while the small- and mid-cap Kosdaq lost 0.69% to 892.27.
Australia’s benchmark S&P/ASX 200 fell 0.77% to 8,660.90.
Hong Kong’s Hang Seng index was down 1.43% in its last hour of trade, while mainland China’s CSI 300 closed 1.09% lower at 4,310.28
—Justina Lee
French central bank chief Moulin says inflation is ‘100%’ energy
The Governor of the Bank of France Emmanuel Moulin said Thursday that European inflation is “100%” driven by energy, adding that the geopolitical shock is now feeding into a financial shock.
As yields on French government debt surged to multiyear highs amid broader concerns over fiscal pressures in several European countries, the European Central Bank board member highlighted a “strong correlation” between oil, long-term U.S. interest rates and rates in Europe.
However, Moulin added that he does not envisage second-round effects.
Meanwhile, fellow ECB board member and president of the Dutch central bank Olaf Sleijpen said medium- to long-term inflation expectations remain “well anchored.”
— Hugh Leask
European stock markets down ahead of Thursday’s open
Stoxx 50 futures were down 0.35% ahead of Thursday’s trading session, with Europe’s major bourses in mixed territory prior to the market open.
The French CAC 40 was seen 0.06% lower, and Germany’s DAX was down 0.27%, while the U.K.’s FTSE 100 was off by 0.14%
The Italian FTSE MIB was also in negative territory, down 0.56%.
—Hugh Leask
European stocks slide into the red
European stock markets started Thursday’s session lower, with regional sectors and major bourses seen moving into negative territory in early trade.
The pan-European Stoxx 600 was 1.07% lower shortly after 8:00 a.m. in London (3:00 a.m. E.T.).
In London, the U.K.’s FTSE 100 was down 0.81%, while the French CAC 40 fell 0.85% in Paris. Elsewhere, Germany’s DAX dropped 1.08% in Frankfurt. The Italian FTSE MIB was 1.53% lower in Milan.
The continent’s oil and gas names were the sole bright spot, advancing 0.32%, as all other sectors turned red. Basic resources led losses, sliding 2.02%, with European banks down 1.82% and healthcare stocks falling 1.45%
—Hugh Leask
HSBC shares fall nearly 4% as lender reportedly plans large-scale job cuts in U.K wealth business
HSBC’s Hong Kong-listed shares fell 3.9% Thursday, following a report that the lender is planning job cuts in its U.K. wealth management business
The sweeping job cuts will include sharp reduction in specialist staff and financial advisors, as part of the bank’s effort to expand AI integration, according to the Financial Times.
HSBC is in a “consultation period” over the proposed changes, the FT reported, adding that the affected employees are likely to exit the bank at the end of the month.
—Justina Lee
Oil gains as Middle East hostilities stoke supply worries
Oil rose Thursday as Middle East worries keep markets on edge, with the U.S. reportedly considering large-scale U.S. military operations in Iran in the coming weeks.
Futures for international benchmark Brent crude for December delivery gained 1.36% at $101.54 a barrel. U.S. West Texas Intermediate futures for November advanced 1.04% at $89.32 per barrel.
President Donald Trump and his national security team have talked about possibly restarting large-scale U.S. military operations in Iran in the coming weeks, NBC News reported, citing sources. That also includes the option of strikes prior to next month’s midterm elections.
Meanwhile, tensions in the Middle East have been rising with Iran-backed Houthis recently targeting airports in Saudi Arabia, while Tehran has also been attacking tankers in the Hormuz Strait.
—Justina Lee
Japan’s Nikkei 225, South Korea’s Kospi fall as Asia markets open in the red
Asian stocks fell on Thursday. Japan’s Nikkei 225 was down 0.4% while the broader Topix declined 0.8%.
South Korea’s Kospi was down 0.35% and the small-cap Kosdaq lost 0.9%.
Asia markets poised to drop as hawkish Fed minutes signal more tightening ahead
Asian stocks were poised to open lower Thursday, tracking losses on Wall Street as U.S. Treasury yields remain elevated and Federal Reserve minutes signaled another interest rate hike could be on the horizon.
Japan’s Nikkei 225 was set to fall at open, with its Chicago and Osaka futures contracts last at 69,965 and 69,790 respectively, compared with the index’s previous close of 70,035.71.
Futures for Hong Kong’s Hang Seng index stood at 23,962 lower than its last close of 24,130.5.
Minutes from the Fed’s latest meeting, released Wednesday, showed most policymakers believed another interest rate increase would likely be appropriate before the end of the year, as inflation remained stubbornly above the central bank’s 2% target.
The minutes, however, offered no indication of when the next hike might come, with officials emphasizing that future decisions would depend on incoming economic data.
— Lee Ying Shan
The Federal Reserve could still leave rates unchanged for the remainder of the year, strategist says
Although the Federal Reserve’s latest meeting minutes signal another interest rate hike by the end of the year, there’s still a chance the central bank won’t raise at all, Ameriprise’s Anthony Saglimbene told CNBC.
“Higher interest rates may be doing some of the Fed’s work, where they don’t necessarily need to raise interest rates,” the chief market strategist said. “That might allow them to kind of just staying pat for the rest of the year.”
However, he added, “There’s a lot of ifs in that statement, and I think it comes down to where interest rates settle out here over the next few weeks, because the market is already concerned that that’s going to start slowing growth.”
— Sean Conlon
Levi Strauss shares dip after earnings
Levi Strauss shares dipped 2% in extended trading Wednesday night, after the denim retailer lowered its net revenue growth guidance for the full year — though it also increased its profit outlook.
The company lowered its net revenue growth guidance for the full year to 7%, the bottom of its previously provided range of a 7% to 7.5% increase.
It also raised its adjusted earnings per share expectation for the full fiscal year to between $1.54 and $1.56, from a previous range of $1.46 to $1.52. Analysts polled by LSEG were expecting a range of between $1.52 and $1.59.
— Sarah Min, Laya Neelakandan
Stock futures open little changed
Stock futures opened little changed Wednesday night.
Dow Jones Industrial Average futures fell 8 points, or 0.02%. S&P 500 futures and Nasdaq 100 futures were both marginally higher.
— Sarah Min
