Global markets experienced mixed trading on Thursday, responding to policy announcements from the US Treasury Department alongside ongoing geopolitical developments affecting commodity prices. European shares opened lower following an advance in Asian markets, where South Korea's benchmark Kospi saw a notable rebound.
US futures edged lower after the US Treasury Department announced it would at least double the size of planned purchases of longer-term government debt. This fiscal measure aims to ease pressure on share prices originating from the bond market. By pushing bond prices higher, the purchases help bring down yields, offering relief to investors concerned about rising borrowing costs.
In European trading, Germany's DAX fell 0.6 per cent to 25,938.92, while Paris's CAC 40 slipped 0.1 per cent to 8,491.06. Britain's FTSE 100 shed 0.3 per cent to settle at 10,713.50.
Conversely, Asian markets displayed stronger performance led by South Korea. The Kospi surged 5.9 per cent to 6,852.58, recovering from a 5.8 per cent tumble on Wednesday caused by renewed selling of artificial intelligence-related shares. Technology heavyweights drove the rally, with Samsung Electronics jumping 9.5 per cent and memory chipmaker SK Hynix surging 12.7 per cent following a significant share buyback plan announcement.
Japan's Nikkei 225 gained 1.4 per cent to 66,216.79, reversing earlier weekly declines. The recovery occurred despite Japan reporting a trade deficit for the third consecutive month in July, driven by record highs in both imports and exports. SoftBank Group, a multinational investment holding firm and OpenAI investor, saw its shares add 3.1 per cent. Elsewhere in the region, Hong Kong's Hang Seng gained 0.8 per cent, the Shanghai Composite rose 0.2 per cent, Australia's S&P/ASX 200 was up 0.3 per cent, Taiwan's Taiex added 0.5 per cent, and India's Sensex climbed 0.7 per cent.
The US Treasury's announcement impacted global bond yields. Yields on US government bonds fell as bond prices rose inversely. The yield on the US 10-year Treasury decreased to nearly 4.65 per cent from 4.71 per cent on Tuesday, though it remains above pre-war levels. The 30-year Treasury yield dropped to around 5.19 per cent from 5.28 per cent. Yields had risen in recent months due to inflation concerns tied to the months-long war in Iran and ballooning government debt. Asian bond yields also eased, with Japan's 10-year government bond yield falling to around 2.85 per cent from 2.95 per cent.
In currency markets, the US dollar rose to 158.53 Japanese yen from 158.16 yen, while the euro traded slightly lower at $1.1683.
Meanwhile, oil prices advanced due to a lack of progress in US-Iran negotiations regarding the ongoing conflict. Brent crude surged 2.2 per cent to $93.61 a barrel, up significantly from roughly $72 per barrel before the war. US benchmark crude also jumped 2.1 per cent to $86.20 a barrel.
"The recent actions by the US Treasury to expand debt buybacks demonstrate how fiscal policy adjustments directly influence bond yields and, by extension, investor sentiment across global equity markets. For businesses and investors navigating current macroeconomic volatility, monitoring liquidity shifts and commodity prices—particularly oil amid geopolitical tensions—remains critical for financial planning and risk management." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
