The rise in the U.S. 10-year Treasury yield to 5.03% and higher oil prices intensified selling pressure in global markets. Investors monitored energy costs and the inflation outlook as interest-rate decisions by leading central banks approached.
A new attack by Yemen's Houthis targeting Saudi Arabia heightened concerns over oil supplies. November-delivery Brent crude rose 1.7% to trade at $107.4 a barrel.
Rising energy prices fueled concerns about persistent inflation. The U.S. 10-year Treasury yield also reached its highest level since July 2007.
Dollar and gold rise ahead of Fed decision
Expectations that the U.S. Federal Reserve would tighten monetary policy to combat inflation increased selling in the bond market. As the two-day interest-rate meeting began, money-market pricing pointed to a rate hike as a certainty.
The Fed last raised interest rates in July 2023. The dollar index rose 0.1% to 99.6 on expectations of a rate hike. Despite the rises in the dollar, oil prices and Treasury yields, gold also gained 0.1% to $4,305 an ounce.
U.S. President Donald Trump said oil prices would fall if the conflicts with Iran ended. Trump described assessments that artificial intelligence technology would spiral out of control as a “sick conspiracy.”
Sharp decline in U.S. technology stocks
Calls to slow technology development efforts in artificial intelligence came to the fore in markets amid competition between the United States and China. Microsoft published a draft set of rules aimed at limiting the behavior of models it will develop in the future as debate over AI safety continued.
The New York Stock Exchange ended the first trading day of the week lower. Nvidia shares fell 3.4%, AMD shares 4.4%, Broadcom shares 4.8%, Intel shares 5.6% and Marvell Technology shares 7.3%.
The Dow Jones fell 0.29%, the S&P 500 declined 0.48% and the Nasdaq dropped 0.56%. U.S. stock-index futures also started the day in negative territory.
Losses in European and Asian markets
European markets outside the United Kingdom declined. As higher oil prices limited risk appetite and losses in technology stocks accelerated, ASML shares fell 6.1% and Infineon Technologies shares declined 7.7%.
Italy's FTSE MIB fell 1.68%, France's CAC 40 declined 0.76% and Germany's DAX 40 lost 0.50%. The UK's FTSE 100 rose 0.44%. Germany's 10-year Treasury yield reached 3.55%, its highest level since 2009.
Isabel Schnabel, a member of the European Central Bank's Executive Board, warned that rising energy prices were concerning. Falling copper prices weighed on mining stocks, while high oil prices supported energy-company shares.
Asian markets also traded lower. China's retail sales rose 0.4% year on year in August but fell short of expectations. Fixed-asset investment declined 7.2%, while industrial production rose 5.2%; the unemployment rate came in above expectations at 5.3%.
Concerns about the Chinese economy continued after the data, while pressure for fiscal support on the Beijing administration was expected to increase. Japan's 10-year Treasury yield rose above 3% again.
Near the close, the Kospi fell 0.6%, the Hang Seng declined 0.2%, the Shanghai Composite dropped 0.1% and the Nikkei 225 fell 0.1%.
Borsa Istanbul falls 1.60%
The BIST 100 index on Borsa Istanbul ended the previous day down 1.60% at 14,235.83 points. In the evening session on Borsa Istanbul's Futures and Options Market, the October contract based on the BIST 30 index traded flat compared with the regular-session close.
The dollar/Turkish lira ended the previous day up 0.2% at 48.6170. The exchange rate traded at 48.6373, just above the previous close, at the opening of the interbank market.
Domestic data on the budget balance and overseas data on the UK's unemployment rate, the eurozone's foreign-trade balance and the U.S. New York Fed manufacturing index will be monitored. Technical assessments highlighted 14,100 and 14,000 points as support levels for the BIST 100 and 14,300 and 14,400 points as resistance levels.
U.S. adds Russia's VTB Bank to sanctions list
The U.S. Treasury Department added Russia's leading financial institutions, VTB Bank, to its sanctions list as part of an “economic exclusion operation” targeting Iran. The department alleged that the bank had helped evade sanctions.
