U.S. stocks had a mixed performance, with the Dow Jones slipping 0.2%, the S&P 500 mostly unchanged, and the Nasdaq Composite adding 0.22%. Despite this, the 10-year Treasury yield reached its highest level since 2007, signaling potential concerns about the state of the economy. In Asia-Pacific markets, the Nikkei 225 led losses, causing markets in the region to fall. However, the Singapore Exchange launched its first structured certificate in an effort to revive itself.
Oil prices surged to their highest level in over a year during Asian trading hours. West Texas Intermediate crude rallied around 1% to $94.61, while Brent added 0.86% to $97.38. This spike in prices was mainly due to a report that crude inventories in Cushing, Oklahoma fell close to their operational minimum.
China Evergrande Group’s shares were suspended after Bloomberg reported that its chairman was placed under police surveillance. The suspension comes after Evergrande reported a loss of 33 billion yuan ($4.15 billion) for the six months ended June and a total net loss of $82 billion for 2021 and 2022. Additionally, Meta announced the release of Quest 3, the latest version of its virtual reality headset, along with new artificial intelligence software and digital assistants.
The combination of high Treasury yields, surging oil prices, and the potential U.S. government shutdown is making it difficult for stocks to gain confidence and climb. Rising Treasury yields could trigger recession fears as borrowing costs increase. Surging oil prices could lead to spending cutbacks by companies and consumers due to higher input costs. A government shutdown would delay economic data and weaken the ability of the Federal Reserve to make informed decisions. Additionally, a shutdown risks another downgrade by ratings agencies, as the U.S. is now weaker fiscally than it was during the 2011 downgrade. These factors contribute to an uncertain and volatile market environment.
