Shares opened higher in Europe on Thursday after a retreat in Asia as rising bond yields weighed on stock prices.
Germany's DAX edged 0.1% higher to 18,486.92 and the CAC 40 in Paris rose 0.3% to 7,956.50. Britain's FTSE gained 0.3% to 8,204.61.
The future for the S&P 500 was down 0.4% while that for the Dow Jones Industrial Average sank 0.8%.
With few data releases this week, the biggest factor weighing on stocks has been rising bond yields. By early Thursday, the 10-year yield had risen to 4.62% from 4.54% late Tuesday, following an auction of $44 billion in seven-year Treasurys.
The 10-year yield has been creeping higher since dropping below 4.40% in the middle of May. Higher Treasury yields hurt prices for all kinds of investments.
Asian shares tracked a pullback on Wall Street, with Tokyo's Nikkei 225 benchmark closing down 1.3% at 38,054.13.
The Hang Seng in Hong Kong declined 1.3% to 18,230.19.
The Shanghai Composite index gave up early gains, losing 0.6% to 3,091.68.
Australia’s S&P/ASX 200 slipped 0.5% to 7,628.20, while the Kospi in Seoul sank 1.6% to 2,635.44.
Taiwan’s Taiex lost 1.4% and India’s Sensex was 0.7% lower.
This month’s swings in bond yields comes as traders recalibrate their expectations for when the Federal Reserve could begin cutting its main interest rate, which is at its highest level in more than two decades.
With inflation stubbornly higher, traders have had to delay their too-optimistic forecasts for rate cuts several times this year.
“Hotter and stickier than expected global inflation appears to be taking the air out of asset markets,” Mizuho Bank said in a commentary. “In other words, “Goldilocks” coming undone. And worries about adverse demand impact from higher rates seeping through,” it said.
On Wednesday, the S&P 500 dipped 0.7%, trimming its gain for May, which had been on track to be its best month since November. Four out of every five stocks in the index dropped.
The Dow industrials lost 1.1% and the Nasdaq composite slipped 0.6%.
The Fed is trying to pull off the balancing act of grinding down on the economy just enough through high interest rates to get inflation fully under control, but not so much that it leads to widespread layoffs.
U.S. stocks have been continuing to set records despite worries about interest rates staying high in part because stocks related to artificial-intelligence technology keep rising. Nvidia’s latest blowout profit report helped drive the frenzy even higher. After briefly dipping in morning trading, it rose 0.8% Thursday for its most modest gain since its profit report..
In other dealings early Thursday, U.S. benchmark crude oil added 1 cent to $79.22 per barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, declined 5 cents to $83.38 per barrel.
The U.S. dollar slipped to 156.93 Japanese yen from 157.65 yen. The euro rose to $1.0818 from $1.0803.
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