<\/p>\n
Stocks tumbled and the Treasury two-year yield climbed to the highest level in 14 months as rising oil prices intensified fears of resurgent inflation, while investors began questioning whether the AI-fueled rally in equities has run too far.<\/p>\n
MSCI\u2019s Asia Pacific share index dropped almost 2%, with South Korea\u2019s Kospi, a bellwether for AI investments, sliding about 5%. Futures contracts for the tech-heavy Nasdaq 100 declined 0.8% in a sign of mounting pressure on the sector. European shares were also set to fall more than 1% at the open. The dollar, the haven of choice during the Middle East war, rose for a fifth day.<\/p>\n
Inflation concerns weighed on government bonds, with the US two-year yield climbing four basis points to 4.06% and the 10-year yield adding the same amount to 4.53%. Japan\u2019s government bond yields marched higher across the curve with the 20-year yield rising 6.5 basis points to 3.61%, the highest since 1996.<\/p>\n
Brent crude extended gains to more than 1% to trade above $107 per barrel after President Donald Trump said the US doesn\u2019t need to reopen the Strait of Hormuz. Hours later though, he said country wanted the key waterway open.<\/p>\n<\/p>\n
The loss of momentum in equities came after strong corporate earnings and a resilient US economy drove global stocks to successive record highs in recent weeks on bets that spending on AI will fuel profit growth. The rally has also overshadowed mounting concerns that oil above $100 a barrel will reignite inflation, reducing the scope for interest-rate cuts and potentially reviving the risk of further tightening.<\/p>\n
\u201cMarkets have fully priced out any Fed cut this year and are starting to assign real probability to a hike before year-end,\u201d said Dilin Wu, a research strategist at Pepperstone Group. \u201cWith oil staying stubbornly elevated, the question of how long equities can keep looking through all of this is becoming more urgent by the day.\u201d<\/p>\n
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What Bloomberg\u2019s Strategists Say\u2026<\/p>\n
\u201cThe Strait of Hormuz will return to focus, with negative consequences for risk assets, now that the tailwind setup of the Trump-Xi summit is behind us. Given that recent equity gains have been both spectacular and concentrated, the pullbacks will likely be dramatic in headline numbers.\u201d<\/p>\n
\u2014 Mark Cudmore, executive editor for Markets Live.<\/p>\n
Investors were also focused on the summit meeting between Trump and Chinese President Xi Jinping. Xi said the two sides have formed a \u201cnew relationship and mentioned \u201ca lot of results,\u201d but details were yet to be revealed.<\/p>\n
While Trump said he had a great meeting with Xi, tensions exist over Taiwan. China also urged reopening the Strait of Hormuz as soon as possible and called for talks on the Iran war. The US president will end his visit later Friday, and a readout from the summit is expected later in the day.<\/p>\n
\u201cThe market\u2019s unsure how to digest the US-China talks,\u201d said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management. \u201cSure, there are signs of more economic cooperation, but what investors were really looking for in the immediate term was progress on Iran, and it doesn\u2019t seem like there was any meaningful discussion on that.\u201d<\/p>\n
Rising bond yields in Japan, the US, and the UK are amplifying the sense of caution, Ueno said. \u201cWith yields rising globally and no sign of the trend slowing, there are worries about the impact on broader capital flows, including into equity markets,\u201d he added.<\/p>\n
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Elsewhere, the pound dropped for a fifth day after a new challenge to the leadership of UK Prime Minister Keir Starmer.<\/p>\n
Gold dropped 1.3% to under $4 600 an ounce.<\/p>\n
On a positive note, first-quarter S&P 500 profits likely grew about 27% from a year ago, marking a sixth straight quarter of double-digit expansion, according to data compiled by Bloomberg Intelligence.<\/p>\n
It\u2019s clear that Corporate America has become very skilled at adapting to a wide range of economic environments, according to Clark Bellin at Bellwether Wealth. For investors who missed the opportunity to put new money to work during the war-driven slide in March, he said: \u201cIt\u2019s not too late.\u201d<\/p>\n
\u201cStocks are still climbing the wall of worry, and we don\u2019t think there is euphoria in markets just yet,\u201d Bellin said. \u201cIn fact, there is still plenty of skepticism, which suggests this bull market has more room to run.\u201d<\/p>\n
Some of the main moves in markets:<\/p>\n
Stocks<\/p>\n
S&P 500 futures fell 0.5% as of 2:21 p.m. Tokyo time
\nNikkei 225 futures (OSE) fell 1.9%
\nJapan\u2019s Topix fell 0.6%
\nAustralia\u2019s S&P\/ASX 200 fell 0.2%
\nHong Kong\u2019s Hang Seng fell 1.3%
\nThe Shanghai Composite fell 0.4%
\nEuro Stoxx 50 futures fell 1.2%<\/p>\n
Currencies<\/p>\n
The Bloomberg Dollar Spot Index rose 0.2%
\nThe euro fell 0.2% to $1.1645
\nThe Japanese yen fell 0.1% to 158.57 per dollar
\nThe offshore yuan fell 0.2% to 6.8004 per dollar<\/p>\n
Cryptocurrencies<\/p>\n
Bitcoin fell 0.7% to $80,858.42
\nEther fell 1.4% to $2,265.26<\/p>\n
Bonds<\/p>\n
The yield on 10-year Treasuries advanced four basis points to 4.52%
\nJapan\u2019s 10-year yield advanced eight basis points to 2.710%
\nAustralia\u2019s 10-year yield advanced five basis points to 5.06%<\/p>\n
Commodities<\/p>\n
West Texas Intermediate crude rose 1.4% to $102.63 a barrel
\nSpot gold fell 1.4% to $4 588.04 an ounce<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#Stocks #bonds #drop #inflation #woes #jolt #traders #Markets #wrap<\/p>\n","protected":false},"excerpt":{"rendered":"
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