Markets lower as higher yields revive pressure on equities

US equities retreated on Wednesday as a renewed rise in long-term Treasury yields revived concerns about valuations and the earnings outlook for interest-rate-sensitive sectors. The S&P 500 and Nasdaq 100 each fell 0.20% from their recent peaks, while the Dow Jones Industrial Average lost 341 points. The 10-year Treasury yield briefly rose to about 5.37%, before easing to roughly 5.28.  Investors continued to weigh the impact of persistent inflation, resilient economic growth, widening fiscal deficits, and heavy corporate debt issuance. Tighter credit conditions also raised concerns about the cost of financing investment and the outlook for companies that rely heavily on borrowing.

Technology stocks were hit heavy. Nvidia fell 0.70%, AMD lost 0.50%, Meta Platforms declined 2.40% and Oracle slipped 0.80%. The weakness came despite reports that SpaceX was considering raising US$40 billion to finance purchases of Nvidia chips. SpaceX fell 2.50%, while Tesla lost 0.70%. Pharmaceutical and consumer-staples stocks, by contrast, moved higher.

Market expectations have shifted since the Federal Reserve’s September meeting, with the probability of an October rate increase falling to about 17%, while the likelihood of a 25-basis-point hike in December rose to around 70%. The US dollar index traded near 102.3, its highest level since March 2025, as elevated bond yields and a stronger greenback reinforced concerns that interest rates could remain higher for longer.

Crude oil eased below $89 a barrel during the session as signs of improving Middle Eastern supply reduced some concerns over global availability. Saudi Arabia lowered official selling prices for its flagship crude grade and said its East-West pipeline was operating at full capacity, while higher export volumes from regional OPEC+ producers also pointed to improving supply. Shipping costs nevertheless remained elevated following reported attacks on vessels in the Strait of Hormuz.

European markets fell sharply as rising energy prices and bond yields weighed on sentiment. The Euro STOXX 50 declined 1.60% and the STOXX Europe 600 fell 1.10%, while the DAX, CAC 40 and FTSE 100 lost 1.40%, 1.20% and 0.81%, respectively. Financial stocks were among the weakest performers, with Deutsche Bank falling 5%, while BNP Paribas, Intesa Sanpaolo and UniCredit each declined around 4%.

Asian markets also weakened, with the Hang Seng Index falling 0.60% to 24 131 and the Nikkei 225 declining 0.92% to 70 035. Technology and AI-related shares were among the weaker performers. Mainland Chinese markets remained closed for the National Day holiday but are scheduled to reopen today, after the extended break.

In South Africa, the JSE All Share Index fell 1.63% to 107 104.29, while the JSE Top 40 declined 1.75% to 99 394.06. The JSE Resources 10 and Metals and Mining indices fell 2.32% and 2.75%, respectively, while the Industrial 25 and Financial 15 declined 0.51% and 2.23%. The rand weakened 0.49% against the US dollar to R16.62 and 0.10% against the pound to R21.96, while it was broadly unchanged against the euro at R18.61.

At 21h26 SAST, gold fell 1.13% to $4 107.36 an ounce the lowest in over one month. Silver declined 3.19% to $59.71 and platinum fell 4.17% to $1 638.55. Brent crude was 0.29% higher at $100.87 a barrel.