Global Stock Markets Drop as Tech Shares Weigh Despite Declining Oil and Yields
Market Overview and Key Drivers
By Sinéad Carew and Iain Withers
NEW YORK/LONDON, Aug 24 (Reuters) - MSCI's global equities gauge lost ground on Monday as weakness in technology stocks offset support from a dip in U.S. Treasury yields and falling oil prices.
Oil Prices and Geopolitical Tensions
Oil prices fell more than $2 per barrel as traders shrugged off U.S. Treasury Secretary Scott Bessent's announcement of an expansion of secondary sanctions that Washington can impose on entities and countries that maintain business ties with Iran as the U.S. significantly ratchets up economic pressure on Tehran, nearly six months into their war.
Bond Yields and Currency Movements
Longer-dated U.S. Treasury yields fell following a report that the Treasury Department may tap its cash account to finance increased debt buybacks. In currencies, the Canadian dollar dipped due to a looming U.S. trade war.
Technology Sector Performance
While most of the S&P 500's industry sectors finished Monday's session with gains, heavyweight technology led losses among the benchmark's three declining sectors, with a 1.6% drop.
"Today it's a mixed bag. Technology is being dragged down by the overnight news from two key companies, but the rest of the market is reacting positively to lower oil prices and lower bond yields," said Gene Goldman, chief investment officer at Cetera, El Segundo, California.
In particular, Goldman pointed to Alibaba's launch of a $10.2 billion share sale at a steep discount to fund its AI ambitions. And South Korean shares fell after Samsung Electronics announced a $79 billion shareholder-return plan, a record amount but still smaller than what investors had expected. Earlier, South Korea's KOSPI index finished down more than 3%.
Technology investors were also on edge ahead of Nvidia's quarterly financial report on Wednesday with worries about how hard it will be for the leading AI chipmaker to meet sky-high expectations.
Major Index Performance
The Dow Jones Industrial Average rose 140.15 points, or 0.26%, to 53,417.16. The S&P 500 fell 21.51 points, or 0.28%, to 7,652.86 and the Nasdaq Composite fell 200.26 points, or 0.76%, to 25,980.19.
MSCI's gauge of stocks across the globe fell 4.58 points, or 0.40%, to 1,145.23.
Earlier in the day, the pan-European STOXX 600 index ended its session little changed at 654.21.
Central Bank Policy and Economic Outlook
Jackson Hole Symposium and Fed Expectations
FROM JACKSON HOLE TO TRADE WARS
Also coming up this week is Federal Reserve Chair Kevin Warsh's first speech at an annual conference in Jackson Hole. The appearance has taken on added weight as traders and analysts look for guidance about the recent jump in bond yields and for reassurance of his independence from the Trump administration.
While traders are pricing in a roughly 58% probability that the Fed will hold rates steady at its September meeting, their bets that rates will not be hiked fall to 43.8% for October and to 25.7% for December, according to CME Group's FedWatch tool.
Treasury Auctions and Bond Market Moves
Meanwhile, Treasury Secretary Bessent said that the U.S. government will continue with its regularly scheduled debt auctions, including for long-dated bonds, despite its move to increase buyback sizes of 10- to 30-year securities.
In government bonds, the yield on benchmark U.S. 10-year notes fell 3.79 basis points to 4.7%, from 4.738% late on Friday. The 30-year bond yield fell 4.84 basis points to 5.2276%.
However, the 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 0.4 basis points to 4.238%.
Trade Tensions and Currency Markets
U.S.-Canadian Trade War
U.S.-CANADIAN TRADE WAR
In currencies, the U.S. dollar advanced after hitting three-month lows last week while U.S. hostilities with Iran intensified along with U.S.-Canada trade tensions.
President Donald Trump on Monday threatened to raise U.S. tariffs on all cars, trucks and automotive parts from Canada to 50% starting January 1, 2027, escalating their trade fight after negotiations collapsed on Friday. A day after the talks floundered, Canadian Prime Minister Mark Carney said on Saturday that retaliatory Canadian tariffs on U.S. goods would come into effect on September 8.
With that, the Canadian dollar weakened 0.56% versus the greenback to C$1.385 per dollar.
Currency and Commodity Performance
The dollar index, which measures the greenback against a basket of currencies, including the yen and the euro, rose 0.2% to 99.01, with the euro down 0.15% at $1.1662.
Against the Japanese yen, the dollar strengthened 0.13% to 159.13.
In energy markets, U.S. crude settled down 2.35%, or $2.05, at $85.01 a barrel and Brent settled at $92.17 per barrel, down 2.35%, or $2.22, on the day.
In precious metals, gold prices pushed to their highest levels in more than three months as technical buyers piled into a rally driven by the U.S. Treasury's recent buyback announcement and a weaker dollar ahead of this week's inflation data and the Jackson Hole meeting.
Spot gold rose 0.97% to $4,647.29 an ounce. U.S. gold futures rose 1.01% to $4,670.90 an ounce.
Reporting Credits
(Reporting by Sinéad Carew, Iain Withers and Wayne Cole. Editing by Alex Richardson, Hugh Lawson, Mark Potter and Aurora Ellis)
