Eurozone bond yields surged due to political uncertainty and fiscal deficit concerns in France. Investor sentiment deteriorated further as rising energy prices heightened prospects of additional interest rate hikes.
Surge in 10-year government bond yields across major Eurozone economies, including France, with the yield spread against German Bunds reaching a 14-year high
Uncertainty over the passage of next year's fiscal consolidation budget due to political division ahead of the French presidential election, exacerbating fiscal concerns
Increasing inflationary pressure caused by sustained high international energy prices
Growing expectations of an additional rate hike by the European Central Bank (ECB) within the year due to inflation concerns
While concerns over liquidity contraction grew due to the U.S. Federal Reserve's rate hike and rising Treasury yields, investor sentiment recovered, led by semiconductor stocks, as expectations for AI infrastructure investment were sustained. Amid the burden of high interest rates, earnings growth in key AI components provided firm downside support for the market.
Concerns over liquidity contraction and stock market declines heightened as the U.S. 10-year Treasury yield rose above 5% following the U.S. Federal Reserve's 25 bp rate hike and hints of further increases.
Despite the pressure of rising Treasury yields, key semiconductor stocks, including the Philadelphia Semiconductor Index, showed strength as expectations for AI development and infrastructure investment persisted.
With Samsung Electro-Mechanics projected to achieve record-high third-quarter earnings on robust demand for MLCCs and packaging substrates for AI servers, bargain-hunting opportunities were noted following its entry into oversold territory.
Despite the Bank of Japan's policy rate hike, exchange rate volatility expanded as yen weakness and dollar strength intensified due to the lack of signals for additional rate hikes.
International crude oil prices (WTI) declined for a third consecutive day as concerns over damage to Saudi oil pipelines eased, partially alleviating inflation pressures.
