European stock markets slid yesterday and Wall Street wobbled as investors reckoned with rising US Treasury yields.
The yield on 10-year US government bonds hit 3% for the first time in more than four years on Tuesday and pushed higher yesterday.
Many investors consider a 3% or better rate of return on bonds the level at which they should put their money in the safe holdings rather than riskier stocks. Thus the rising bond yields could presage a decision by many investors to adjust their holdings out of stocks.
Although US companies continued to mostly beat earnings expectations, the market has not cheered.
“Company earnings continue to beat top and bottom line estimates, but investors are not impressed,” said market analyst Jasper Lawler at London Capital Group.
“Top that off with 3% Treasury yields competing for their money and stocks look unattractive.”
New York wobbled in and out of positive territory.
The Dow was down 0.07% approaching midday, while the broader S&P 500 index was flat, and the tech-heavy Nasdaq Composite was up 0.2%.
In Europe, Frankfurt took the worst hit, dropping by 1% at 12,422.30.
Both London and Paris gave up 0.6%.
The inability of London’s benchmark FTSE 100 to close higher was all the more noteworthy given two major takeover developments.
US media giant Comcast yesterday confirmed its £22bn ($31bn) firm offer for Sky.
The news, which threatened to derail media mogul Rupert Murdoch’s attempt to take full control of Sky, sent shares in the British pay-TV giant soaring 3.9% to top the gainers board on the FTSE 100.
In response to the Comcast news, Sky announced it had withdrawn its support for 21st Century Fox’s £11.4bn bid for the 61% of the UK broadcaster that it does not already own.
Meanwhile shares in the London-listed maker of Botox, Shire, fell 2.8% after its management recommended an improved £46bn offer from Japan’s Takeda. Shares in Takeda tumbled 7% in Tokyo.
Oil prices fell after data showed US crude production hit a record high and stocks confounded expectations to rise.
Traders look at their screens at the Frankfurt Stock Exchange. The DAX 30 lost 1% to 12,422.30 points yesterday.
