AM 16 Sep 26: US stocks slide as oil surges, bond yields jump
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Why did oil prices surge and bond yields jump, sending US markets lower?
A listener production. Oil spikes and bond yields rise, sending US markets lower. The ASX set to open higher and a closer look at a key indicator pointing to further upside in bond yields. Hello, good morning. I'm James Gruber. It's Wednesday, the 16th of September, and this is the morning edition of the CompSec Market Update. Well, overnight was a similar story to much of the past week. Oil prices soared again as a series of disruptions to supplies from the Middle East worried markets. And US government bond yields continued their march higher, with the US 10-year yield topping 5% ahead of the Federal Reserve's decision on interest rates tomorrow, US time. Unsurprisingly, both of these developments didn't help stocks, which extended their slide.
Let's take a deeper look at what's happened with Aussie futures, commodities and currencies. The ASX is poised to open higher with index futures up 0.4% shortly after 6am.
How is the ASX expected to open higher despite the global market sell‑off?
Yesterday, the ASX 200 fell 0.9% to close at $8,673, its lowest close in over three months. Miners dropped 2.3%, their fourth straight session of losses, dragged down by lower iron oil prices, with BHP and Rio Tinto losing more than 2% each. Banks also lost 1.1%, as the big four banks all traded in the red. Today, energy is again likely to be the standout sector given rising crude prices. On those commodity markets, global oil prices climbed after oil loadings at Saudi Arabia's Red Sea port of Yambu were suspended and Libya halted operations at three oil fields, heightening concerns that disruptions to key oil supply routes could persist for weeks. Brent crude futures settled up almost 3% at $108.75 a barrel.
Base metal prices were mixed. Copper futures advanced 0.6% despite news of copper exports from the Congo hitting record levels. Meanwhile, aluminium futures declined 0.2% after China's aluminium output reached record highs in August. Gold futures fell, pressured by a stronger US dollar and elevated US government bond yields. The futures settled 0.4% lower at US$4,333 an ounce. Meantime, iron ore futures were steady, down 0.1% at US$97.41 a tonne.
How are rising crude prices affecting energy stocks and commodity futures?
Let's now take a look at currencies. They were lower against the US dollar. The euro slipped 0.1% to 1.1541 US dollars. The Japanese yen fell 0.5% to 155.09 yen. And the Aussie dollar dipped 0.1% to 71.31 US cents. Heading to Wall Street now, the Dow Jones Index finished down 0.6%, the S&P 500 lost 0.5% and the NASDAQ dipped 0.8%. A closer look at the trading day there, US share markets extended their slide as rising US treasury yields, mounting debt concerns and soaring crude prices kept buyers on the sidelines. Among the 11 major sectors of the S&P 500, consumer discretionary stocks were the biggest percentage losers, while energy advanced 2.2%. The Semiconductor Index, which has helped drive broader stock market gains this year, failed to materially recover from Monday's rout, eking out a 0.4% gain.
NVIDIA rose 0.6% as CEO Jensen Huang pushed back on AI doomsday sentiments, suggesting everybody wins in the AI race in America. Apple supplier Skyworks Solutions gained 14% and was the best performer on the S&P 500 after its CEO said he was confident a pending merger with Quavo would close soon. Weakness in Bitcoin weighed down crypto firms Coinbase and Strategy 10% and 5.4% respectively.
What caused US equity indices to slide and which sectors were hardest hit?
U.S. government bond yields gained on higher oil prices, fueling inflation concerns. The U.S. 10-year Treasury yield rose 4 points to 4.00%, while the U.S. 2-year Treasury yield advanced 4 points to 4.67%. To the European markets, the continent-wide FTSE Euro First 300 index ended down 0.4% and the UK FTSE 100 slipped 0.4% too. Europe fell to three-month lows as rising oil prices and bond yields continued to dampen investors' risk appetite ahead of the US Federal Reserve's rate decision. Banks and financial services stocks were among the biggest drags, falling 0.9% and 1.9% respectively. UBS dropped 3.4%, making it among the top decliners on the stock 600. The sector came under pressure a day after Bank of America CEO Brian Moynihan warned that the U.S.
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Chapters
6 chapters
1
Why did oil prices surge and bond yields jump, sending US markets lower?
0:02–1:09
2
How is the ASX expected to open higher despite the global market sell‑off?
1:09–2:46
3
How are rising crude prices affecting energy stocks and commodity futures?
2:46–4:27
4
What caused US equity indices to slide and which sectors were hardest hit?
4:27–5:49
5
Why did European stocks fall to three‑month lows amid higher oil and bond yields?
5:49–6:59
6
Which Australian dividend‑paying stocks are in focus and what ex‑dividend dates matter today?
6:59–8:18