Global equities retreated, pressured by a broad-based sell-off in bond markets. This abruptly halted an AI-driven stock rally that had recently propelled U.S. shares to consecutive record highs.
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Bond yields surged across the Americas, Europe, and Asia amid growing doubts over whether Middle East oil supplies will return to normal anytime soon.
Furthermore, a sharp spike in Japan's wholesale inflation data provided a fresh warning sign of escalating price pressures across the global economy, according to a Bloomberg report on Friday.
The yield on the 10-year U.S. Treasury note continued its climb above 4.5%, while the 30-year Japanese government bond yield touched 4% for the first time since 1999. Political turmoil in the United Kingdom exacerbated the sovereign bond sell-off, pushing the 10-year Gilt yield up by 10 basis points to 5.10%.
Nasdaq 100 futures fell by 0.9%, while S&P 500 futures slid 0.6%. These losses signal a grim end to a week where equity markets had previously withstood rising bond yields. This resilience had been fueled by a surge in chipmaker stocks of over 60% since April, despite the lack of an agreement between the U.S. and Iran to reopen the Strait of Hormuz.
In other markets, Europe’s Stoxx 600 index slipped 0.7% on Friday morning. The MSCI Asia Pacific Index ex-Japan dropped 2%, erasing its entire weekly gains, while South Korea's Kospi index led the losses with a 6% plunge.
China's blue-chip index declined by 1%, and Hong Kong’s Hang Sedi (Hang Seng) index shed 0.9%.
In Japan, the benchmark Nikkei index closed lower on Friday, locking in a weekly loss due to profit-taking on high-flying tech stocks toward the end of the week.
The Nikkei 225 index dropped 2%, shedding around 1,245 points to close at 61,409.29, reversing an early session gain of up to 0.9%.
The broader Topix index slid 0.4% to 3,863.97 points, after earlier gaining 1.3% to approach its highest level since February 27—the day it hit an all-time peak of 3,938.68 points.
