Rising bond yields hit global markets, techs rattled by chip hack report

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Share markets were wobbling on Friday after benchmark U.S. Treasury yields surged to a fresh seven-year high, and techs looked vulnerable after a reported that U.S. companies’ systems had been infiltrated by malicious computer chips inserted by Chinese spies. David Pollard reports.

Rising yields are proving a big deal and making equities less attractive.

It started on Treasury bond yields spiking to a seven-year high on strong US data …

And on thoughts of the higher Fed rates that might prompt.

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European shares followed Asian peers downwards at the open ….

A dollar still close to recent highs compounds concern for emerging markets.

(SOUNDBITE) (English) DARREN SINDEN, MARKET ANALYST, PEPPERSTONE, SAYING:

“Rising rates means a stronger dollar, a stronger dollar depresses the price of commodities that many emerging markets export, but also makes servicing the debts denominated in dollars that many of these emerging markets have that much dearer to service. I saw a chart yesterday that plotted WTI in Turkish lira terms for instance, and effectively over the last six months oil prices in Turkey double to a domestic buyer.”

Tech stocks also opened with their eyes on Asia ….

And a Bloomberg report that Chinese intelligence agents had planted malicious computer chips …

The alleged victims: around 30 companies and multiple US government agencies.

Apple and Amazon both fiercely deny they found such chip in their servers as far back as 2015.

(SOUNDBITE) (English) DARREN SINDEN, MARKET ANALYST, PEPPERSTONE, SAYING:

“What I find particularly interesting is the fact that SuperMicro, the company whose servers are meant to have been tampered with, they say they know nothing about it nor of any U.S. investigation into this …. I suspect we won’t know the truth now until we hear maybe more formally from the U.S. government whether they take action against China.”

Bank shares were one sector expected to gain on the prospect of higher rates.

Unless you’re Danske.

It was down nearly nine per cent after a downgrade from Credit Suisse.

On Thursday, the US Department of Justice’s confirmed its ‘interest’ in Danske’s 200 billion euro money laundering scandal.

The one big surprise on Friday: sterling’s 10-week high ….

After a report quoted diplomats in Brussels saying a Brexit divorce deal was ‘very close’.