Bond recovery settles Wall Street

US bonds recovered from a sharp selloff that pushed yields to a fresh 24-year high, with stocks on Wall Street set to snap a three-day losing streak as chipmakers got a boost from Micron Technology’s strong revenue and earnings growth, while Accenture surged on artificial intelligence-fuelled demand for its consulting services.

Across the Atlantic, French finance minister Roland Lescure’s efforts to get his country’s books in order failed to quell unease over the outlook of Europe’s second-biggest economy, with the yield on French 10-year bonds at their widest spread above their German equivalent since the continent’s sovereign debt crisis 15 years ago.

AI giant Anthropic’s initial public offering is still on track through the latest ructions facing the sector, with reports the Claude developer is eyeing a listing before Thanksgiving at the end of November, while Australia’s Firmus Technologies is said to be seeking a valuation of up to A$43.7 billion when it goes public later this month.

Australia’s stock market is on track to follow Wall Street’s lead, with futures pointing to a positive start for the ASX, while ANZ’s monthly gauge of consumer confidence is the main economic focus on this side of the Tasman.

A quick whip around

The yield on US 10-year treasuries rose as high as 5.34% in the Northern Hemisphere trading session before reversing course, falling to 5.24% at 7am in Auckland, down 4 basis points from yesterday, as Federal Reserve vice chair Philip Jefferson said there was no need for urgency in raising interest rates.

Bond market movements were exacerbated by hedge funds repositioning their portfolios for the new quarter, with European debt coming under greater scrutiny. The yield on France’s 10-year bond hit a 24-year high of 4.96%, and was recently up 6 basis points to 4.9% as bond traders panned French finance minister Lescure’s plans to narrow the budget deficit.

New Zealand’s equivalent bond was at 5.11% at 7am, with the kiwi dollar sinking to 55.95 US cents at 7am from 56.20 cents yesterday.

“European markets came under pressure as concerns over France’s fiscal outlook triggered a broader sovereign bond selloff,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “The move weighed on the euro, European bank shares and broader equity markets, underscoring investors’ sensitivity to fiscal risks across the region.”

The UK’s FTSE 100 dropped 1.7%, while Germany’s DAX declined 1% and France’s CAC 40 sank 1.6%.

US stock markets were more upbeat, with the S&P 500 on track for its first gain in three days, up 0.2% in late trading, while the tech-heavy Nasdaq Composite also gaining 0.2%. The Dow Jones Industrial Average dipped 0.1%, with Walt Disney Co, Amgen and Johnson & Johnson at the bottom of the leaderboard.

Public deals

Chipmakers such as Nvidia and Intel rallied as the AI trade was buoyed by Micron’s strong quarterly earnings, with the memory chipmaker up 2% in late trading.

Meanwhile, Accenture surged 17% after the consulting firm said AI disruption fuelled demand for its consulting services, reporting a 6% lift in quarterly revenue and beating analysts’ estimates.

Broadcom dipped after it agreed to lend up to US$42 billion to Anthropic to lease its chips in another circular deal that has left some investors cold.

Meanwhile, Bloomberg reported Anthropic was targeting an IPO next month and before the Nov 26 Thanksgiving Day holiday.

The Wall Street Journal reported OpenAI terminated three researchers in the safety team, accusing them of sharing confidential information with a third-party safety organisation.

And the Australian Financial Review reported Firmus would start taking formal bids from institutions for its upcoming IPO on the ASX, setting a price of A$11 a share for a valuation of A$43.7 billion.

Australian futures are pointing to a 0.6% gain for the S&P/ASX 200 index when trading opens across the Tasman, following the stronger lead from Wall Street.

Local data today include the ANZ-Roy Morgan consumer confidence survey.

Reporting by Paul McBeth. Image from Jakub Żerdzicki on Unsplash.