US stocks fall on spiking bond yields, higher oil prices

U.S. stocks declined on Monday due to rising oil prices and higher yields on 30-year US Treasury bonds. The 30-year bond yield surged to 5.31%, its highest level since June 2007, while oil prices jumped more than 2%. The lack of progress in opening the Strait of Hormuz and the absence of a deal between the United States and Iran to reopen the strait contributed to oil price gains.

Analysts noted that spiking Treasury yields indicate markets anticipate inflation will remain high and that a surge in US bonds reaching the market will maintain elevated yields. The absence of buying interest in the session, partly due to summer vacations and low trading volumes, accentuated the market move. All major U.S. indices closed lower, with the S&P 500 falling 0.5%.

The European Central Bank expressed concern about the potential spillover effects of an AI bubble on European markets, predicting a correction in stock market valuations. The U.S. AI situation could impact European sentiment, financing conditions, and hiring. Corporate earnings reports from retail giants Walmart, Home Depot, and Target on Monday may provide insights into consumer sentiment, potentially taming inflation worries and easing concerns about the Federal Reserve's interest rate hikes.

In Asia, Hong Kong benefited from tech giants Alibaba, Tencent, and JD.com, while Shanghai and Taipei also rose. Tokyo advanced as the chipmaker Kioxia surged over 15%, and SoftBank, Advantest, and Tokyo Electron increased by 1.6% to 2.6%.