Stocks in Europe and Asia Decline Amid Bond Market Turmoil
Global stock markets faced losses on Friday, as investor sentiment remained fragile following a turbulent week marked by uncertainty over U.S. trade policy and rising borrowing costs. While a steep selloff in government bonds showed signs of easing, markets remained on edge ahead of key U.S. economic data.
European and Asian Stocks Retreat
European equities declined 0.9%, putting the region on track for its first weekly loss after 10 consecutive weeks of gains. Luxury and retail stocks were among the biggest drags on the market.
Meanwhile, in Asia, MSCI’s broadest index of Asia-Pacific shares (excluding Japan) dropped 0.6%, while Japan’s Nikkei fell to a six-month low. Chinese blue-chip stocks also lost 0.5% following weak trade data, which highlighted economic challenges amid ongoing tariff concerns.
Bond Market Turmoil Eases
A sharp selloff in euro zone government bonds—sparked by Germany’s ambitious spending plans—began to ease. After experiencing the biggest two-day drop since the 1970s, the benchmark 10-year German Bund yield fell 5 basis points to 2.84%.
The euro, benefiting from rising euro zone borrowing costs, was on track for its strongest weekly performance since 2009.
U.S. Market Focus: Jobs Report and Fed Speech
Investors were closely watching the upcoming U.S. non-farm payrolls report and a speech from Federal Reserve Chair Jerome Powell, both expected to offer insights into the outlook for interest rates.
Wall Street had a volatile week, with concerns over slowing U.S. growth and President Donald Trump’s fluctuating trade policies weighing on sentiment. The Nasdaq officially entered correction territory after peaking in December.
In a surprising move, Trump suspended recently imposed 25% tariffs on most goods from Canada and Mexico, creating further uncertainty. Deutsche Bank analysts noted that the suspension is only a delay rather than a permanent exemption, leaving lingering doubts about future trade relations.
Conclusion: Market Sentiment Remains Fragile
While bond market turbulence has shown signs of stabilizing, risk-off sentiment continues to dominate global markets. Investors remain cautious, awaiting further clarity on U.S. trade policy and interest rate direction. With key economic data and policy statements due later in the day, markets could see further volatility as traders reassess risks and opportunities.
