Soaring bond yields unsettle equities

Equities

The FTSE 100 experienced a challenging day, closing down 0.8%, marking its worst performance in over a month. This decline was influenced by uncertainties surrounding potential interest rate cuts in the US and ongoing political dynamics in the UK. Investors eagerly await Bank of England Governor Andrew Bailey's upcoming remarks for further insights into the timing of any rate adjustments.

Flutter Entertainment, a major player in online sports betting, faced a setback, sliding 7.3% following the Illinois Senate's approval of a sports-betting tax hike. On a more positive note, Ocado, the online supermarket, emerged as a top performer on the FTSE 100 with an impressive 9.8% surge.

The Nasdaq Composite struck a new milestone, breaching the 17,000 mark for the first time ever. This historic moment was propelled by a remarkable 7% surge in Nvidia shares, driving up other chip stocks in the process. Despite a strong showing in the technology sector, the broader S&P 500 saw modest gains of 0.02%, while the Dow Jones Industrial Average dipped 0.55%.

Apple shares remained relatively flat despite robust iPhone sales in China, hinting reluctance from investors to get back in while the company falls behind on AI.. Meanwhile, GameStop shares surged by 25.2%, following news of a successful $933 million fundraising effort. Additionally, Hess shareholders greenlit a $53 billion merger with Chevron, contributing to positive sentiment in the energy sector.

Forex & Commodities

The US dollar held steady, supported by growing expectations that the Federal Reserve will delay rate cuts until later in the year. Rising Treasury yields, prompted by lacklustre debt auctions, also bolstered the dollar. The yen weakened to a four-week low against the dollar, while the euro edged lower. Sterling remained stable, set to post a 2% gain for the month.

Gold prices rose as the dollar slipped to a one-week low, making gold more appealing to investors. Silver and platinum also saw gains, while palladium eased slightly.

Oil prices climbed over $1 per barrel, with Brent crude settling at $84.22 and US crude at $79.83. Expectations that OPEC+ will maintain crude supply cuts at its upcoming meeting, along with the start of the US summer driving season, supported prices. However, concerns over sustained higher US interest rates tempered gains.