Equities Fall as Inflation Concerns Pressure Global Markets – Europe Market Wrap

Stocks and bonds declined as higher oil prices intensified inflation concerns and investors began questioning how long the artificial intelligence-driven rally can continue.

MSCI’s Asian equity index fell 1.2%, while US stock futures slipped 0.3% amid speculation that energy costs may remain elevated for longer. European markets were set to open about 1% lower. The dollar, which has acted as a haven since the Middle East conflict escalated in late February, strengthened for a fifth consecutive session.

Inflation worries pressured government bonds. The US two-year Treasury yield rose three basis points to 4.05%, while the 10-year yield climbed to 4.51%. Japan’s 10-year yield jumped as much as seven basis points after data showed producer prices increased at the fastest annual pace since 2023.

Brent crude gained more than 1% to trade above $107 a barrel after President Donald Trump initially said the US did not need to reopen the Strait of Hormuz. He later appeared to soften that stance, saying the country wanted the key shipping route reopened.

Although Trump described his meeting with China’s Xi Jinping positively, tensions over Taiwan remained in focus. China called for the Strait of Hormuz to reopen as soon as possible and urged renewed negotiations over the Iran conflict. Trump is set to conclude his visit later Friday.

The pound weakened for a fifth straight day as pressure mounted on UK Prime Minister Keir Starmer amid a renewed leadership challenge.