Global financial markets continued to falter, with Asian benchmarks falling after Friday’s historic drop in U.S. stock indices. Investors reacted to rising Treasury yields and political uncertainty in Japan, leading to a cautious trading atmosphere across major markets.
On Wall Street, the S&P 500 index dropped 0.7%, its biggest loss in a month. The index lost 44.72 points to close at 6,415.54. The broader Dow Jones Industrial Average suffered losses, dropping 249.07 points or 0.5%, to close at 45,295.81. The Nasdaq composite tumbled even deeper, plummeting 175.92 points, or 0.8%, to end at 21,279.63.
The market’s volatility was further stoked by rising Treasury yields. As a result, the 10-year Treasury yield spiked to 4.27%, an increase from 4.23% at the end of last week. This increase is a clear indication that investors are more worried about inflation and the prospect of further increases in interest rates.
Nvidia, the bellwether of the tech industry, fell by 2%. This decline was the primary reason that dragged the S&P 500 down along with it. Its fall embodies bigger fears about technology stocks as investors recalibrate their bet on growth versus higher-yielding alternatives.
On the international front, crude oil prices tumbled. Brent crude, the international standard, fell 18 cents to $68.96 a barrel, while benchmark U.S. crude dropped 15 cents to $65.44 a barrel. Such a decline comes as no surprise given the persistent worries over worldwide demand in an unsettled global economy.
In Asia, Japan’s benchmark Nikkei 225 index lost almost 1% in afternoon trading to end at 41,894.70. The market’s crashing in the context of huge domestic political chaos. Making matters worse for Prime Minister Ishiba, his main power broker just announced his resignation, rattling the very core of Japan’s ruling Liberal Democratic Party.
Stephen Innes, managing partner at SPI Asset Management, commented on the situation:
“The political tremor is domestic, with Prime Minister Ishiba’s key power broker signaling his resignation, shaking the foundations of the ruling party.”
Australia’s S&P/ASX200 also had a rough day, tumbling 1.8% to 8,737.40 at the closing bell. South Korea’s Kospi inched up 0.2%. It ended at 3,177.87 as investors clearly took a risk-off approach given the regional news.
The China-sensitive Hang Seng index in Hong Kong sank by 0.6%, settling at 25,337.95. At the same time, the Shanghai Composite dropped 0.8%, closing at 3,826.05. These moves underscore the fears that investors feel about current market conditions — on the ground, as well as internationally.
In response to the economic landscape, a company in the chemical products industry expressed concerns about ongoing uncertainties:
“Too much uncertainty for us and our customers regarding tariffs and the U.S./global economy.”
Globally, rising Treasury yields are causing a huge crisis of confidence among investors. Political instability in Japan is compounding this uncertainty. Financial markets will be glued to these developments. Analysts will watch how these factors will shape overall market trends in the weeks ahead.
