The Japan Times - Wall Street stocks mixed as energy prices, bond yields turn lower

Stocks have been dropping and government bond yields have hit fresh multi-decade highs as elevated oil prices increase the prospect of central banks hiking interest rates.

But the yield on the 10-year US government bond dipped ahead of the open in New York and oil prices turned lower, helping the Dow and S&P open higher as stock trading got underway in New York.

"There wasn't a specific news catalyst to account for the reversals," said Briefing.com analyst Patrick O'Hare.

"It was simply a trend interrupted by some seller/buyer exhaustion, rooted in a sense that perhaps for now the respective trends need some relaxation," he added.

Bond yields and oil prices have risen since a weekend US strike on an Iranian island in the Strait of Hormuz, sparking a series of tit-for-tat attacks in which Tehran has targeted American interests in Mideast countries.

"The renewed US-Iran attacks and their impact on oil prices have made investors more concerned," said Rajeev De Mello at Gama Asset Management.

With the strait -- through which about a fifth of world oil and liquefied natural gas normally pass -- effectively closed and energy costs unlikely to come down markedly anytime soon, fears are growing that high inflation will settle in.

European gas prices on Wednesday reached the highest level since the start of 2023.

That has upped investor expectations that the US Federal Reserve will raise interest rates later this month, putting upward pressure on bond yields.

Investors are gearing up for the release of key data on US jobs and inflation over the next week that could determine whether the Federal Reserve lifts rates at its next policy meeting due this month.

Governments worldwide are seeing their debt repayments jump as yields on their bonds reach in some cases the highest levels since the end of the last century.

The yield on 30-year UK government bonds is at the highest level since 1998, while for 10-year debt it was last higher during the global financial crisis of 2007-08.

Japan's 10-year bond yield is at a 30-year high, 30-year US Treasuries are just short of their 2007 mark and the US 10-year yield is also at financial-crisis levels.

Stock markets across Asia showed the biggest falls Wednesday with their key technology firms -- which rely on low borrowing rates to fuel their investments -- sending Tokyo down 2.9 percent and Seoul four-percent lower.

"At these levels, higher yields are clearly a headwind to Asian equities," said Gama Asset Management's De Mello.

Europe's main stock markets were lower in afternoon trading, but had trimmed their losses from earlier in the day.

The yen gained more than one percent against the dollar amid suspicions of an intervention by the Bank of Japan on currency markets to support the currency.

- Key figures at around 1330 GMT -

New York - Dow: UP 0.4 percent at 52,973.14 points

New York - S&P 500: UP less than 0.1 percent at 7,638.09

New York - Nasdaq Composite: FLAT at 26,093.53

London - FTSE 100: DOWN 0.2 percent at 10,768.89

Paris - CAC 40: FLAT at 8,300.09

Frankfurt - DAX: DOWN 0.3 percent at 25,888.03

Tokyo - Nikkei 225: DOWN 2.9 percent at 64,325.64 (close)

Hong Kong - Hang Seng Index: DOWN 0.1 percent at 25,311.21 (close)

Shanghai - Composite: DOWN 1.0 percent at 3,941.39 (close)

Brent North Sea Crude: DOWN 0.2 percent at $94.45 per barrel

West Texas Intermediate: UP 0. percent at $89.70 per barrel

Euro/dollar: UP at $1.1596 from $1.1589 on Tuesday

Pound/dollar: DOWN at $1.3501 from $1.3511

Dollar/yen: DOWN at 158.82 yen from 160.24 yen

Euro/pound: UP at 85.90 pence from 85.77 pence

S.Ogawa--JT