Key facts
- European shares closed lower on Thursday due to rising oil prices and bond yields.
- US Treasury yields hit multi-year highs, with the 10-year yield reaching its highest since 2007.
- Oil prices climbed, with Brent crude up 3.4% and WTI up 2.7%.
- US President Donald Trump and Chinese leader Xi Jinping met to discuss trade, technological competition, and support for Tehran.
- ECB board member Isabel Schnabel resigned to take a role at the IMF.
- Futures markets indicate a 70% chance of a Federal Reserve rate hike in October.
European shares declined on Thursday, pressured by a combination of rising oil prices and elevated US Treasury yields, which hit multi-year highs. The benchmark 10-year US Treasury yield climbed to its highest level since 2007, and the 30-year yield reached its highest since 2004, reflecting resilient economic growth, rising inflation risks, and expectations of further monetary policy tightening by the Federal Reserve. Futures markets are pricing in approximately a 70% probability of a Fed rate increase in October.
Oil prices saw a significant jump, with Brent North Sea Crude up 3.4 percent to $106.60 per barrel and West Texas Intermediate up 2.7 percent to $94.61 per barrel. This rise in energy costs contributed to a reduction in risk appetite among investors.
In Europe, the resignation of ECB board member Isabel Schnabel to join the International Monetary Fund added to market sentiment, signaling a potential reshuffle at the central bank. Major European indices like the FTSE 100, CAC 40, and DAX all closed lower.
US stock markets began the session in negative territory. While a Reuters report about progress on an accord to reopen the Strait of Hormuz provided a temporary boost, the S&P 500 and Nasdaq finished essentially flat, and the Dow closed modestly lower. Investors also closely watched the meeting between US President Donald Trump and Chinese leader Xi Jinping, where discussions were expected to cover trade, AI competition, and Beijing's support for Tehran. Xi Jinping urged caution on AI development and opposed Taiwan's independence during the meeting.