Global equity markets are facing downward pressure as rising government bond yields continue to challenge investor sentiment. The recent surge in oil prices has exacerbated inflationary concerns, further diminishing the likelihood of central bank rate cuts. This environment has particularly impacted technology shares, which are more sensitive to interest rate changes, leading to notable declines in indices such as the Stoxx 600 and S&P futures. The increase in US 10-year Treasury yields, now up by 3 basis points to 4.79%, underscores the market's anticipation of sustained higher interest rates, which in turn raises the cost of equity and affects stock valuations.
In the commodities market, oil prices have seen an upward trajectory, with West Texas Intermediate (WTI) rising 1.7% to $77.90, marking the highest level since July. This increase in oil prices is contributing to inflationary pressures, which could lead to further interest rate hikes. Meanwhile, the pound has weakened due to fiscal concerns, while the yen has strengthened, reflecting its status as a safe-haven currency amid global economic uncertainties.
Brent crude oil, represented by the CO1 contract, is currently trading at $81.04 as of 05:40 on January 13, up from its last close of $79.76. This rise in oil prices is a key factor in the broader inflationary environment, influencing both market sentiment and central bank policy expectations.