Morning Note: A Round-up of Global Financial Market News.
Market News
Brent crude has climbed toward $96 a barrel, rising for a third consecutive session to its highest level in nearly six weeks as escalating hostilities between the US and Iran heightened concerns over further disruptions to energy flows from the Middle East. The US military launched fresh strikes against Iranian targets around the Strait of Hormuz, which President Donald Trump said were retaliation for Tehran’s attempts to lay mines in the waterway and for an earlier attack on a US military base. Diesel advanced to the highest in more than four months and European natural gas prices were at the highest levels since 2023.
Rising energy costs pressured bonds, pushing global yields higher, as traders increased bets the Federal Reserve and other central banks will raise interest rates. Yields on 10-year Treasuries climbed to 4.81%, the highest level since late 2023. The 30-year US Treasury yield has climbed back to levels seen just before Treasury Secretary Bessent expanded a buyback programme, effectively wiping out those gains. The prospect of interest rate hikes continues to weigh on the gold price, which currently trades at $4,325 an ounce.
US equities traded lower last night – S&P 500 (-0.7%); Nasdaq (-1.0%). Stocks experienced a defensive rotation, while growth and cyclical names moved lower. Momentum was weaker with both semis and memory stocks down. Software saw a big decline, while the Mag 7 names were mostly lower. Dell Technologies bucked the overall downbeat tone, jumping 8% in extended trading after raising its annual sales forecast. The weak trend continued in Asia this morning: Nikkei 225 (-3.0%); Hang Seng (-0.3%); Shanghai Composite (-0.9%); Kospi (-4.0%).
The FTSE 100 is currently 0.3% lower at 10,758. The oil majors continue to perform well, with BP up 5% yesterday and 1% in early trading this morning. BP has announced, following an extensive search process, its Interim Chair, Ian Tyler, has been appointed Chair on a permanent basis.
PM Andy Burnham returned to parliament confronted by the harsh reality of Britain’s weak public finances amid the global bond sell-off. The 10-year Gilt yield is currently 5.25%, while Sterling trades at $1.3510 and €1.1670.
Source: Bloomberg
