Following Oil Rise, Stocks Decline as Bond Rout Deepens – Europe Market Wrap
The sell-off in global bonds widened after another increase in oil prices fueled fears that the Middle East conflict is stoking inflation. Stocks fell before Friday’s employment report.
The 10-year Treasury yield rose three basis points to 4.17%, on track for its largest weekly increase since April. S&P 500 futures declined 0.5%. The Dollar rose 0.2%, while gold remained unchanged.
In the most recent Middle East developments, Iran launched a volley of missiles and drones against several Gulf countries overnight. Israel, in collaboration with the United States, continued to launch airstrikes on Iran. Residents in Dubai received missile alarms on Friday, while Saudi Arabia, Kuwait, and Bahrain also claimed strikes.
European stocks were set for their worst weekly drop since April. The Stoxx Europe 600 lost 0.8%, bringing its weekly decrease to 5.4%. Traders reduced their bets on BoE rate reduction in 2026, now pricing in around a 50% possibility of a quarter-point move. The yield on two-year gilts rose 11 basis points to 3.91%.
Money markets are also completely pricing in that the ECB would hike borrowing prices this year, a shift from a week ago when a decrease was seen as more plausible.
