Global markets have declined due to heavy selling pressure in the bond market, uncertainties surrounding artificial intelligence companies, and ongoing tensions in the Middle East.
Bond Market Status and Oil Prices
Investors have exercised caution due to imminent decisions by central banks regarding interest rates, while Middle Eastern tensions have led to rising oil prices and bond yields. In this context, the recent attack by Houthi rebels on Saudi Arabia has raised concerns about oil supply, with Brent crude oil prices for November delivery rising by 1.7% to reach $107.4 per barrel.
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Rising Bond Yields and Market Reaction
The yield on 10-year U.S. Treasuries reached 5.03%, the highest level since July 2007. This increase, driven by rapidly rising oil prices, has raised concerns about the potential permanence of inflation. Given these conditions, the Federal Reserve is expected to tighten monetary policy to combat inflation during its two-day policy meeting starting Tuesday. The last time the bank raised rates was in July 2023.
Meanwhile, the U.S. dollar increased by 0.1% to 99.6, and gold prices also rose by 0.1% to $4,305 per ounce. While oil prices and bond yields are on the rise, demand for gold remains affected.
The U.S. stock market also declined on Monday amid concerns about the slowdown in AI development, with shares of chip manufacturers like Nvidia and AMD falling by 3.4% and 4.4%, respectively. Overall, the Dow Jones Industrial Average fell by 0.29%, the S&P 500 by 0.48%, and the Nasdaq by 0.56%.
In Europe, stock markets were also in negative territory except for the UK. Shares of Dutch technology company ASML fell by 6.1%, and shares of German Infineon Technologies dropped by 7.7%. Meanwhile, the yield on 10-year German bonds reached 3.55%, the highest level since 2009.
In Asia, stock markets faced pressure, with various indices such as South Korea's KOSPI and Hong Kong's Hang Seng declining by 0.6% and 0.2%, respectively. This situation reflects the ongoing economic challenges in China, following a decline in investment and rising unemployment rates in the country.
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