Global Markets Tumble Amid Earnings Worries and Bond Yield Surge
The Asian market experienced a substantial sell-off, with Japan and South Korean benchmark indexes leading the region’s declines. In Australia, shares closed at a level not witnessed for over a year, as investors drew insights from Wall Street’s overnight performance.
In Europe, stock markets opened with a sharp decline on Thursday, with a focus on third-quarter earnings and government bond yields. Notable developments included Unilever Plc falling due to a third-quarter sales miss, WPP Plc dropping more than 5% after revising its revenue growth outlook, Mercedes-Benz Group AG declining by 6% as it projected car-making margins at the lower end of its forecast, and Standard Chartered Plc’s shares falling after missing profit estimates.
On Wall Street, a series of corporate earnings reports drove stock prices lower, with notable impact from Meta Inc.'s uncertain earnings outlook and Google parent Alphabet Inc.'s underwhelming cloud-related figures.
Furthermore, the 10-year Japanese government bond yield reached a fresh 10-year high ahead of a central bank meeting next week, pushing the yen past 150 per dollar and raising the risk of intervention from authorities in Tokyo. Japan’s finance minister, Shunichi Suzuki, emphasized their vigilant monitoring of currency movements.
Simultaneously, monetary policy decisions are expected from the European Central Bank, where a hold in interest rates is highly anticipated, and the central bank of Turkey, with economists polled by Reuters, expects a 500 basis point hike to 35%.
Later on Thursday, a flurry of data, including US Initial jobless claims and GDP numbers, will offer a fresh snapshot of the world’s largest economy. Global increases in bond yields are also casting a shadow over the markets. Recent volatility may influence the ECB’s decisions on quantitative tightening, while the gradual rise in the 10-year U.S. Treasury yield is causing concerns about the outlook for stocks.