(Bloomberg) — Global stock and bond markets extended losses on Monday, hit by diminishing wagers on Federal Reserve interest-rate cuts and a further oil-price spike that poses a fresh threat to inflation.
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Wall Street was set to add to Friday’s losses, with futures on the S&P 500 down 0.7%, and those on the Nasdaq 100 falling 1.1%. Tech shares, including Tesla Inc., Palantir Technologies Inc. and Nvidia Corp., were among the high-profile losers in premarket trading. European shares dropped 0.7%, with technology names leading the declines.
World markets, already in turmoil since the start of 2025, suffered a fresh setback on Friday from a blowout US jobs report that prompted traders to slash their wagers on Fed rate cuts to less than 30 basis points for the whole of 2025. The figures sparked a selloff that wiped out the S&P 500’s year-to-date gain and sent Bloomberg’s dollar index to two-year highs.
Ten-year Treasury yields — the rate that underpins the global cost of capital — rose further to touch a 14-month high, up more than 15 basis points this year. Thirty-year borrowing costs hovered just below the psychologically key 5% threshold.
“As long as the US fixed-income market hasn’t stabilized, it will be difficult for the equity market to regain strength,” said Benjamin Melman, chief investment officer at Edmond de Rothschild Asset Management. “We need some stabilization, but as we are seeing this morning, it is not going to happen today.”
Meanwhile, another wave of US sanctions on Russia sent Brent crude futures to a five-month high above $81 a barrel. If the move reduces the global crude surplus, it could keep energy prices elevated, lifting price pressures.
The rise in Treasury yields and the dollar is affecting markets worldwide, raising borrowing costs across Asia and Europe. UK assets, which have been at the epicenter of the turmoil, continued to lose ground, with 10-year gilt yields holding near 2008 highs, and the pound extending last week’s 1.7% slump to trade at the weakest since November 2023.
Rabobank analysts said that while the UK’s fiscal deficit was a major concern, “a large part of the move higher in UK long-term interest rates reflects the push higher in global rates, which is linked to a US-led rise in risk premia.” Attention turns next to UK inflation data due Wednesday.
The US also releases inflation figures on the same day, with economists forecasting the year-on-year print to have picked up to 2.9%. That could further reduce bets on Fed easing. Already Bank of America Corp. has moved to predicting no rate cuts at all this year, and in fact sees the risk of a hike.
Rothschild’s Melman considers the data to be crucial, given President-elect Donald Trump’s pledge to implement policies that are widely seen as inflationary.
“If we have confirmation that the disinflation process stalled even before Donald Trump’s re-election, it could provide some more tension for US fixed income,” he said.
China is another source of pressure for market sentiment, with shares extending losses even after data showed record exports last year. The offshore-traded yuan dropped close to a record low against the dollar, forcing authorities to ramp up support for the currency and tweak capital curbs.
Corporate Highlights:
Johnson & Johnson agreed to acquire Intra-Cellular Therapies Inc., a biopharmaceutical company focused on treatments for central nervous system disorders, for about $14.6 billion, the company said.
Macy’s Inc. issued a slightly more downbeat outlook for sales in the current quarter, a sign that executives might have been too optimistic about their expectations for a solid holiday shopping season.
Apple Inc. sold 5% fewer iPhones globally and lost ground to Chinese rivals in the final quarter of last year, reflecting the absence of Apple Intelligence in its largest market outside the US.
Moderna Inc. slashed its sales forecast for this year as the company continues to struggle with slow demand for its Covid and RSV vaccines.
Shake Shack Inc. reported fourth-quarter sales that surpassed expectations, signaling that efforts to raise its profile and serve customers faster are paying off.
Abercrombie & Fitch Co. raised its fourth-quarter sales outlook on better-than-expected holiday sales, but the increase wasn’t enough to reassure investors the retailer could keep up the fast pace of growth.
Key events this week:
New York Fed President John Williams speaks, Tuesday
Bank of Japan Deputy Governor Ryozo Himino speaks, Tuesday
Eurozone industrial production, Wednesday
France CPI, Wednesday
UK CPI and US CPI, Wednesday
Chicago Fed President Austan Goolsbee, Minneapolis Fed President Neel Kashkari speak, Wednesday
Australia unemployment, Thursday
Germany CPI, Thursday
US initial jobless claims, retail sales, import prices, Thursday
Bank of America, Morgan Stanley earnings, Thursday
China GDP, property prices, retail sales, industrial production, Friday
Eurozone CPI, Friday
US housing starts, industrial production, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.7% as of 7:28 a.m. New York time
Nasdaq 100 futures fell 1.1%
Futures on the Dow Jones Industrial Average fell 0.2%
The Stoxx Europe 600 fell 0.7%
The MSCI World Index fell 0.2%
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.5% to $1.0192
The British pound fell 0.8% to $1.2105
The Japanese yen rose 0.2% to 157.37 per dollar
Cryptocurrencies
Bitcoin fell 3.8% to $90,738.6
Ether fell 6.2% to $3,063.99
Bonds
The yield on 10-year Treasuries advanced two basis points to 4.78%
Germany’s 10-year yield advanced one basis point to 2.61%
Britain’s 10-year yield advanced two basis points to 4.86%
Commodities
West Texas Intermediate crude rose 2% to $78.09 a barrel
Spot gold fell 0.7% to $2,670.75 an ounce
This story was produced with the assistance of Bloomberg Automation.
