Today’s Stock Market: European shares open higher after rebound in Asia

ELAINE KURTENBACH, Associated Press

2 hours ago

People pass the New York Stock Exchange on Wednesday, May 29, 2024, in New York City. Wall Street was poised to open with losses as some major trades and a handful of earnings reports filled the news gap leading up to Friday’s latest inflation report. (AP Photo/Peter Morgan, file)

Shares in Europe opened higher on Thursday after falling in Asia as rising bond yields weighed on share prices.

Germany’s DAX rose 0.1% to 18,486.92 and Paris’s CAC 40 rose 0.3% to 7,956.50. Britain’s FTSE gained 0.3% to 8,204.61.

The future of the S&P 500 Index fell 0.4%, while the Dow Jones Industrial Average fell 0.8%.

Given the sparse number of data releases this week, the biggest factor impacting stocks was rising bond yields. Early Thursday, the 10-year yield rose to 4.62% from 4.54% late Tuesday after an auction of $44 billion in seven-year Treasuries.

The 10-year bond yield has been rising slowly since dipping below 4.40% in mid-May. Higher yields on treasury bonds negatively affect the prices of all types of investments.

Asian shares fell on Wall Street, with Tokyo’s benchmark Nikkei 225 closing down 1.3% at 38,054.13.

Hong Kong’s Hang Seng fell 1.3% to 18,230.19.

The Shanghai Composite Index gave up early gains, losing 0.6% to 3,091.68.

Australia’s S&P/ASX 200 index fell 0.5% to 7,628.20, while Seoul’s Kospi fell 1.6% to 2,635.44.

Taiwan’s Taiex lost 1.4% and India’s Sensex fell 0.7%.

This month’s swings in bond yields come as investors recalibrate their expectations for when the Federal Reserve might begin cutting its key interest rate, which is at its highest level in more than two decades.

Amid persistently higher inflation, investors have been forced to delay their overly optimistic forecasts of interest rate cuts several times this year.

“Hotter and stiffer-than-expected global inflation appears to be taking the air out of asset markets,” Mizuho Bank said in a commentary. “In other words, Goldilocks is falling apart. And concerns about the adverse impact of higher rates on demand,” they wrote.

The S&P 500 index fell 0.7% on Wednesday, limiting gains for May, which was expected to be the best month since November. Four of the five companies included in the index lost value.

The Dow industrials lost 1.1% and the Nasdaq fell 0.6%.

The Fed tries to balance the effect of weakening the economy with high interest rates enough to fully control inflation, but not so much that it leads to widespread layoffs.

U.S. stocks continue to break record highs despite concerns about continued high interest rates, in part because of the continued rise in shares of AI-related companies. Nvidia’s latest report of huge profits has further fueled the frenzy. After a brief decline in morning trading, it rose 0.8% on Thursday, the most modest gain since the earnings report.

In other trading early Thursday, benchmark U.S. crude rose 1 cent to $79.22 a barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the international standard, fell 5 cents to $83.38 a barrel.

The U.S. dollar fell to 156.93 Japanese yen from 157.65 yen. The euro rose to $1.0818 from $1.0803.