Shares in Europe traded higher on Thursday following a retreat in Asia, as U.S. markets experienced their third consecutive day of losses, signaling a slowdown in a prolonged rally.
Oil prices saw a notable increase, gaining more than $1 per barrel. Germany’s DAX index rose 0.8% to 19,525.36, while France’s CAC 40 also climbed 0.8% to reach 7,557.30. Similarly, the UK’s FTSE 100 advanced by 0.8%, closing at 8,322.03.
Futures for the S&P 500 increased by 0.5%, although the Dow Jones Industrial Average saw a slight decline of 0.1%.
In Asia, Japan’s benchmark Nikkei 225 experienced a more significant drop in early gains, ultimately closing 0.1% higher at 38,143.29. The performance was influenced by purchasing manager indexes (PMIs) that indicated deteriorating conditions in both manufacturing and services sectors, with the composite PMI compiled by au Jibun Bank hitting a two-year low. “Japan’s private sector fell into contraction territory at the start of the fourth quarter,” noted Usamah Bhatti, an economist at S&P Global Market Intelligence. “Confidence about business activity growth in the next 12 months softened in October and was the least pronounced since August 2020.”
Chinese markets followed suit with declines; Hong Kong’s Hang Seng dropped 1.3% to 20,489.62, while the Shanghai Composite fell 0.7% to 3,280.26. In South Korea, the Kospi slipped 0.7% to 2,581.03, and Australia’s S&P/ASX 200 edged down 0.1% to 8,206.30. Taiwan’s Taiex decreased by 0.6%, the Sensex in India fell 0.1%, and Bangkok’s SET declined 0.2%. Stephen Innes of SPI Asset Management attributed the market sentiment to “a cocktail of worries about China’s economic outlook and a contentious U.S. presidential election.”
On Wall Street, the S&P 500 fell 0.9% on Wednesday, marking a pullback after six consecutive weeks of gains, its longest winning streak of the year. Rising pressure from Treasury yields has contributed to the market’s struggles, as higher yields often make investors hesitant to pay elevated stock prices, which some believe have outpaced corporate earnings. The Dow Jones Industrial Average fell 1%, and the Nasdaq composite declined by 1.6%, with notable losses in Big Tech stocks such as Nvidia and Apple.
The yield on the 10-year Treasury rose to 4.23%, up from 4.21% late Tuesday and considerably higher than the 4.08% observed on Friday. The upward trend in Treasury yields follows reports indicating a stronger-than-expected U.S. economy, which could alleviate fears of a painful recession while combating rising inflation.
In corporate news, McDonald’s shares dropped 5.1% after federal health officials linked its Quarter Pounder burgers to an E. coli outbreak affecting at least 49 individuals across 10 states. The Centers for Disease Control and Prevention stated that the fast-food chain halted the use of fresh slivered onions and quarter pound beef patties in certain states during the investigation.
Boeing’s stock fell 1.8% on what could be a pivotal day for the aerospace manufacturer, which reported a staggering loss of over $6 billion for the latest quarter. Additionally, Boeing factory workers voted against the company’s latest contract offer by 64%, extending a six-week strike that has halted production of its bestselling jetliners. Boeing’s stock has plummeted nearly 40% this year.
Despite the challenges faced by many tech companies, AT&T’s shares rose 4.6% after reporting better-than-expected quarterly profits. Texas Instruments also experienced a surge of 4% following its own strong profit and revenue report.
In other early trading news, U.S. benchmark crude oil increased by $1.27 to $72.04 per barrel, while Brent crude, the international standard, rose by $1.23 to $76.19 per barrel. The U.S. dollar fell to 152.13 Japanese yen after reaching over 153 yen on Wednesday, and the euro strengthened to $1.0799 from $1.0783.
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