US shares edged higher as a sharp retreat in Treasury yields helped stabilise markets following recent pressure from rising borrowing costs. The S&P 500 gained 0.2%, with healthcare leading seven of its 11 sectors higher. The improvement followed three consecutive losing sessions for the benchmark, including a 0.69% decline to 7,691.76 in the previous session.
Healthcare stocks led the advance. Moderna surged 177% after the company said its personalised cancer vaccine, developed with Merck, reduced the recurrence of melanoma in a late-stage trial. Merck gained 12.6%.
The rebound came after technology and semiconductor stocks had been hit by another round of selling. Western Digital, Sandisk, Marvell Technology and Seagate Technology were among the major decliners in the previous session as investors reassessed technology valuations against higher bond yields.
The broader focus remains on whether easing yields can provide sustained support to equities as investors balance resilient corporate earnings against inflation and interest rate risks.
US Treasury yields fell sharply after the Treasury said it plans to increase buybacks of longer-dated debt, providing some relief to the bond market. The US 10-year yield dropped 6 basis points to 4.64%. The US dollar fell to a three-month low, while gold surged more than 4% and Bitcoin gained 7%. Oil remains an important inflation risk as the Iran war continues and negotiations between Washington and Tehran remain stalled. West Texas Intermediate crude had risen to US$84.94 a barrel in the previous session, with President Donald Trump saying there were currently no talks scheduled with Iran and that the naval blockade remained in place.
Australian Market Outlook
Australian shares are set to edge higher, with S&P/ASX 200 futures up 27 points, or 0.3%, to 9,034. The decline in US Treasury yields should provide some support to sentiment after rising global bond yields weighed on equities earlier in the week. Investors will also continue to work through the August reporting season, with company earnings remaining a key driver of individual stocks. Locally, the focus remains on the outlook for interest rates following this week’s wages data and recent hawkish signals from the Reserve Bank. Developments in the Iran war and their impact on oil prices will also remain important for Australia’s inflation outlook.
