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Global markets turned more upbeat as bond yields eased and the selling pressure on technology stocks lifted. Fresh US inflation and spending figures, moves in the bond market and the direction of tech shares continue to shape investor sentiment.

US producer prices rose faster than expected in September, while Federal Reserve Chair Kevin Warsh's optimistic comments on artificial intelligence helped technology shares recover from the previous session's losses.

US price data keep Fed tightening expectations alive

The US Producer Price Index rose 1.3% on a monthly basis and 6.3% year on year in September, both above expectations. Producer inflation reached its highest level since March 2022 on a monthly basis and since December 2022 on an annual basis.

The acceleration in producer prices, following the consumer inflation data released earlier, raised concerns about persistent price pressures. Expectations are building that the Federal Reserve could raise interest rates again in its fight against inflation running above target. Retail sales rose 0.8% in September on a monthly basis, also beating expectations, which kept forecasts of continued tight monetary policy firmly in place.

Initial claims for unemployment benefits climbed to 199,000 in the week ending October 10, in line with market expectations.

Bond yields ease as investors move into Treasuries

Selling pressure on technology stocks driven by concerns that high interest rates could weigh on artificial intelligence investment gave way to a recovery today, after Fed Chair Kevin Warsh offered an optimistic assessment of the AI theme.

Continued worries about the technology sector and about economic growth pushed investors toward bonds. The yield on the US 10-year Treasury fell 11 basis points yesterday, sliding from 5.19% to 5.08%, and was trading little changed today. The easing of selling pressure in the bond market also supported equity markets.

With that pressure fading, the dollar index slipped 0.2% to 101.9, while an ounce of gold traded at $4,171, just above the previous close. Reports that the International Energy Agency agreed to bring more than 20 million barrels of diesel to the market, on top of the oil left over from the record emergency reserve release pledged in March, left December Brent crude down 0.5% at $105.4 per barrel.

Separately, the US Treasury Department added 16 individuals and 10 entities linked to Iran to its sanctions list as part of measures aimed at blocking Iran's access to the international financial system.

Wall Street and European bourses close in positive territory

New York stock exchanges finished yesterday in positive territory, as gains in healthcare shares offset losses among technology companies. Nvidia shares lost nearly 2%, AMD fell 1.5% and Intel dropped about 3%. Healthcare company Eli Lilly gained 3.5% and UnitedHealth rose 2.8%, while retail giant Walmart added 1.5%.

Barclays analysts said they see signs that senior executives at SpaceX and Tesla are considering a merger. SpaceX shares fell 2.3% and Tesla shares declined 1.3%. Against those moves, the Dow Jones index gained 1.08%, the S&P 500 rose 0.33% and the Nasdaq added 0.08%. US index futures opened the new day in positive territory.

European bourses were positive except Italy, supported by strong corporate earnings and gains in healthcare stocks. In the United Kingdom, August growth came in above expectations at 0.1% on a monthly basis and 2.1% annually, and the pound reached $1.33 today, its highest level since September 30. Euro area industrial production fell more than expected in August, declining 0.5% monthly and 1.1% annually.

Germany's DAX 40 gained 0.33%, the UK's FTSE 100 rose 1.08% and France's CAC 40 added 0.78%, while Italy's FTSE MIB lost 0.72%. European index futures also started the day in positive territory.

Asian shares extend technology-led rebound

Asian stock markets were trading in positive territory in the new session, driven by the recovery in technology shares. South Korean technology company SK Hynix gained 3.8% and Samsung Electronics rose 4.6%, while Japanese technology companies Kioxia and Sony added 3.2% and 2.4% respectively.

Near the close, South Korea's Kospi index rose 3.9%, Japan's Nikkei 225 gained 2%, Hong Kong's Hang Seng added 1.1% and China's Shanghai Composite climbed 1%.

Borsa Istanbul ends lower with S&P review in view

Borsa Istanbul was dominated by selling yesterday, with the BIST 100 index closing 0.40% lower at 12,070.17 points. The October futures contract on the BIST 30 index on the Borsa Istanbul Futures and Options Market gained 0.08% in the evening session compared with the normal session close.

The dollar/lira pair ended yesterday 0.1% higher at 49.4648 and traded at 49.5106 in today's interbank opening, 0.1% above the previous close.

Analysts said they will watch the housing price index and the market participants survey at home, Standard & Poor's expected review of Turkey, Bank of England Governor Andrew Bailey's speech, euro area trade balance and inflation, and US industrial production and capacity utilization abroad. They put support for the BIST 100 at 12,000 and 11,900 points and resistance at 12,200 and 12,300 points.

S&P's assessment of Turkey is expected after markets close this evening. The forecast is that the agency will keep Turkey's credit rating at "BB-" and its outlook at "stable". Today's calendar also includes the euro area September headline and core inflation data at 12.00, US import and export price indexes at 15.30, and US industrial production at 16.15.

Key takeaways

• US producer prices rose 1.3% monthly and 6.3% annually in September, both above expectations.
• The US 10-year Treasury yield fell 11 basis points yesterday to 5.08% and was little changed today.
• Asian shares extended a technology-led rebound while BIST 100 closed 0.40% lower at 12,070.17.
• S&P is expected to publish its assessment of Turkey after markets close, with its rating seen unchanged at BB-.