Nasdaq Futures Steady as Treasury Yields Hit 19-Year High

Summary

Nasdaq futures held steady even as the US 10-year Treasury yield hit a 19-year high, surging nearly 20 basis points in two sessions, while 30-year yields reached their highest since 2004. A Treasury buyback fell short, taking just $4 billion of the $6 billion scheduled. Japanese yields hit levels unseen since 1996, though the Nikkei gained. European futures pointed higher as oil slipped, with Brent still around $105, while Norges Bank surprised with a rate hike.

Equities

The FTSE 100 fell 0.24% to close at 10,679.99 points on Thursday, while the FTSE 250 dropped 0.85%. London stocks came under pressure as oil prices climbed to one-week highs and UK government bond yields rose, with the benchmark 10-year gilt yield reaching 5.38%.

BP closed 2.6% higher on Thursday and Shell gained 1.7% as oil prices rose more than 4%. The increase followed Houthi missile attacks on Saudi Arabia and limited progress in talks between the US and Iran.

Raspberry Pi jumped 19.6% on Thursday after reporting higher first-half revenue and pre-tax profit, supported by strong industrial demand. Vistry fell 3.1% after cutting its annual profit expectations and saying its strategic overhaul would result in a £470 million charge.

Rolls-Royce closed 1.3% lower and BAE Systems lost 1.5% on Thursday. Standard Life dropped 4.2% and Computacenter fell 4.4% as both stocks traded ex-dividend.

In the US, the S&P 500 slipped 0.02% to close at 7,704.13 points on Thursday. The Nasdaq edged 0.01% higher to 26,939.37, while the Dow Jones Industrial Average fell 0.31% to 51,349.98.

Meta Platforms climbed 4.5% on Thursday, a day after unveiling a small handheld device designed for use with its recently launched AI assistant. Advanced Micro Devices rose 2.4%, while Microsoft fell 0.5% and Broadcom declined 1.3%.

Oracle dropped 3.5% on Thursday after a report that the company had issued a force majeure notice relating to a New Mexico data centre. MGM Resorts fell 11% after Barry Diller’s People Inc withdrew its proposal to buy the casino operator.

Forex & Commodities

The US dollar remained firm early on Friday and was heading for a second consecutive weekly gain, supported by rising Treasury yields and expectations of further Federal Reserve tightening. The dollar index eased slightly to 101.2 but remained near a two-month high. The euro fell to $1.137, its lowest level in two months, while sterling remained near a three-month low at $1.322 and was heading for its weakest weekly performance in four months.

The Japanese yen strengthened early on Friday to 158.2 per dollar, recovering from a three-week low after Japan stepped up warnings over currency weakness. Finance Minister Satsuki Katayama said the US and Japan remained aligned on intervention following their joint action in July, although the yen was still heading for a second consecutive weekly decline. The Australian dollar edged higher to $0.7018, while the New Zealand dollar was unchanged at $0.5659.

Spot gold slipped early on Friday to $4,271 an ounce and was heading for a weekly loss of more than 2%. Expectations for tighter US monetary policy strengthened after Federal Reserve officials indicated that further rate increases may be required to bring inflation back towards the 2% target. Markets were pricing in a nearly 69% probability of another US rate rise in October.

Oil prices fell early on Friday as prospects for a US-Iran truce outweighed concerns about further Houthi attacks on Saudi Arabia. Brent crude declined to $105.1 a barrel, while WTI fell to $92.61. US and Iranian negotiators were discussing a phased agreement that could include reopening the Strait of Hormuz and lifting the US economic blockade of Iran.