Stocks tread cautiously as traders weigh US Treasury action / Photo: © AFP
Stocks tread cautiously as traders weigh US Treasury action
Global stock markets traded cautiously on Friday as investors assessed the US Treasury's effort to push down long-term borrowing costs, which spiked this week.
Oil prices held onto the week's gains as the United States and Iran remained deadlocked over a deal to reopen the Strait of Hormuz.
Bitcoin rallied and the dollar fell as the initial boost from the US Treasury's surprise move to buy back more of its own bonds faded at the end of the week.
"The turmoil in the debt markets continues despite efforts to calm feverish borrowing costs," said Susannah Streeter, chief investment strategist at Wealth Club.
"Investors remain concerned about inflationary risks and the growing mountain of government borrowing, while at the same time, debt being issued by tech giants building out the AI revolution is offering stiff competition," she added.
The US Treasury's action came after the 30-year yield surged to levels last seen in 2007, just before the global financial crisis.
Bitcoin has surged more than 20 percent since Wednesday, with the US Treasury's efforts to push yields lower helping to drive demand for riskier assets.
The rally in the world's biggest cryptocurrency by market value was also spurred by US President Donald Trump urging lawmakers to pass crypto legislation that has stalled in the Senate.
In Europe, the London, Paris and Frankfurt stock markets were all slightly higher. US equity futures were higher in pre-market trading.
The increase in yields weighed on Wall Street Thursday, where all three main indexes fell as tech firms -- which rely on debt to fund their huge investments -- dropped.
"For now, investors are viewing the Treasury's steps more as a band-aid than a structural solution to rising yields," said Deutsche Bank's Jim Reid.
However, several Asian markets enjoyed another healthy day, with tech-rich Seoul helped higher by a rally in chipmakers.
Samsung jumped 3.9 percent as reports said it was planning a shareholder return worth as much as $79 billion.
Hong Kong also rose, while Tokyo fell and Shanghai was flat.
On currency markets, the yen rose against the dollar after Japanese inflation picked up last month on higher oil prices caused by the Middle East crisis, giving the country's central bank room to hike interest rates next month. The euro also gained on the dollar.
Traders will be closely watching next week's annual meeting of central bankers, economists and finance chiefs in Jackson Hole, hoping for some clarification on monetary policy.
- Key figures at around 1100 GMT -
London - FTSE 100: UP 0.2 percent at 10,764.14 points
Paris - CAC 40: UP 0.1 percent at 8,462.58
Frankfurt - DAX: UP 0.3 percent at 26,049.53
Tokyo - Nikkei 225: DOWN 0.3 percent at 66,016.36 (close)
Hong Kong - Hang Seng Index: UP 1.2 percent at 26,009.46 (close)
Shanghai - Composite: FLAT at 3,905.20 (close)
Dollar/yen: DOWN at 158.75 yen from 159.11 yen on Thursday
Euro/dollar: UP at $1.1703 from $1.1680
Pound/dollar: UP at $1.3647 from $1.3630
Euro/pound: UP at 85.75 pence from 85.68 pence
West Texas Intermediate: UP 0.3 percent at $87.13 per barrel
Brent North Sea Crude: UP 0.2 percent at $93.97 per barrel
(U.Kabuchyn--DTZ)
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