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Global stocks fall as US bond yields continue to surge

WT24 Desk

NEW YORK – US and European stocks tumbled Friday on worries about higher borrowing costs spurred by this week’s sudden jump in US Treasury bond yields, AFP reports.

Markets remained focused on yields of the 10-year US Treasury, which rose for the third straight day, this time to 3.225 percent.

Analysts said the sudden surge in interest rates had deepened worries about higher inflation and an uptick in costs for loans and mortgages.

Art Hogan, chief market strategist at B. Riley FBR, said the jump this week in yields had been “breakneck” and could be “disruptive” to stocks.

“The bond market has sold off all week and interest rates have been pushing higher, because traders are worried the Fed is going to have to be more aggressive in its rate hikes,” said FTN Financial’s Chris Low. “That
tightening fear is finally starting to spill over into stocks.”

Among major US indices, the Nasdaq fell the most at 1.2 percent.

Earlier, London, Paris and Frankfurt all lost at least one percent.

The declines in stocks came after the US Labor Department estimated that the country added 134,000 net new positions last month, far weaker than analysts expected and a figure that was likely dented by Hurricane Florence.

However, the unemployment rate fell to 3.7 percent last month from 3.9 percent, an unusually large drop and the lowest reading since December 1969.

Analysts viewed the jobs report as good enough to keep the Federal Reserve on course to keep lifting interest rates. The jobs data also followed a trove of positive economic indicators released earlier in the week.

Among individual stocks, Tesla Motors slumped 7.1 percent after Chief Executive Elon Musk mocked the US Securities and Exchange Commission on Twitter, sparking worries that an SEC settlement on fraud charges with Musk that let him remain CEO could fall apart.

In Europe meanwhile, shares in Danske Bank stumbled 6.2 percent in Copenhagen, a day after the lender revealed it was being investigated by the US Department of Justice over possible money laundering related to more than 200 billion euros ($235 billion) that had moved through the Danish lender’s Estonian branch.

In London, Unilever shares dipped after the Anglo-Dutch consumer giant axed post-Brexit plans to switch its London headquarters to Rotterdam owing to a shareholder revolt.

– Key figures around 2050 GMT –

New York – Dow Jones: DOWN 0.7 at 26,447.05 (close)

New York – S&P 500: DOWN 0.6 percent at 2,885.57 (close)

New York – Nasdaq: DOWN 1.2 percent at 7,788.45 (close)

London – FTSE 100: DOWN 1.4 percent at 7,318.54 points (close)

Paris – CAC 40: DOWN 1.0 percent at 5,359.36 (close)

Frankfurt – DAX 30: DOWN 1.1 percent at 12,111.90 (close)

EURO STOXX 50: DOWN 0.9 percent at 3,345.51 (close)

Tokyo – Nikkei 225: DOWN 0.8 percent at 23,783.72 (close)

Hong Kong – Hang Seng: DOWN 0.2 percent at 26,572.57 (close)

Shanghai – Composite: Closed for a public holiday

Euro/dollar: UP at $1.1520 from $1.1514 at 2100 GMT

Pound/dollar: UP at $1.3115 from $1.3021

Dollar/yen: DOWN at 113.66 from 113.91 yen

Oil – Brent Crude: DOWN 42 cents at $84.16 per barrel

Oil – West Texas Intermediate: UP 1 cents at $74.34 per barrel

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