"Black Friday" approaches! Inflation panic crushes tech stock frenzy, global stocks, bonds, and forex under pressure.

Global financial markets experienced a "Black Friday" as investors' enthusiasm for technology stocks was replaced by inflation concerns, driving US Treasury yields to one-year highs. The market's expectations for the Fed's interest rate hikes continued to rise, putting pressure on global stock, bond, and currency markets. AI hype subsides, global stock markets face Black Friday On Friday, the MSCI Emerging Markets Index fell 2.2%, marking its largest drop in over six weeks, with the South Korean stock market leading the decline. The Korea Composite Stock Price Index (KOSPI) briefly hit the key level of 8000 points on Friday morning, before reversing and falling over 7%, with foreign investors continuing to sell off, particularly in technology stocks. Emerging market stocks experienced their largest single-day drop in over a month The Japanese stock market also took a hit, with the Nikkei Index falling 1.8%. Data showed that the country's wholesale inflation rate accelerated to 4.9% in April, the fastest pace in three years, fueling expectations of a rate hike by the Bank of Japan. European and American stock markets also could not escape the downturn. European stock markets opened weaker, with the Euro Stoxx 50 index falling 0.9%, and the German DAX30 index, UK FTSE 100 index, and French CAC40 index all dropping by nearly 1%. US stock futures saw a significant pullback, with Nasdaq futures falling 0.6% and S&P 500 futures dropping 0.4%. Just the previous trading day, US stocks hit a historic high as the share price of AI leader Nvidia soared by 4%. The world's attention was focused on Beijing, where Trump concluded a two-day state visit on Friday. Yue Su, Chief Economist for The Economist Intelligence Unit China, said, "I think the meeting has progressed fairly smoothly so far, and the overall atmosphere is quite positive. Strategic stability has improved, tail risks have slightly decreased, which should be seen as a positive signal. However, this stability may be quite fragile and cannot eliminate potential frictions." Padhraic Garvey, Head of Research for the Americas at ING, said, "Trump's visit to China temporarily diverted attention from the anxiety about war with Iran. But we will soon be back in the shadow of the Iran war." Inflation fears reignite, global bond markets in turmoil Concerns about energy supply escalated due to slow progress in the navigation of the Strait of Hormuz, as well as recent incidents of ship attacks and seizures in the region. Brent crude oil futures rose by 5.7% this week, reaching $107 per barrel, intensifying concerns about inflation and becoming a key trigger for market sentiment downturn. Rising inflation expectations have led to severe turbulence in global bond markets, with the US Treasury market bearing the brunt. This week, auctions of three-year, ten-year, and thirty-year US Treasury bonds all showed weakness, highlighting market fragility. The latest thirty-year US Treasury bond auction yielded 5.046%, reaching its highest level since August 2007. Although slightly higher yields attracted some buyers on Thursday, the thirty-year US Treasury bond yield rose again on Friday, climbing by 5 basis points to 5.067%, the highest level since July 2025. Not only long-term bonds, but short-term bond yields also surged significantly. On Friday, the two-year US Treasury bond yield rose by 7 basis points to 4.065%, its highest level since March 2025; the ten-year Treasury bond yield also climbed by 7 basis points to 4.528%. Garvey from ING said, "The most pressing issue at the moment is inflation, and from a bond market perspective, this issue is still a cause for concern. We still believe that bond yields will face upward pressure in the coming weeks." In the currency markets, due to the lack of progress in the Strait of Hormuz, the US dollar is expected to rise by 1.3% this week, marking its largest weekly gain in two months. Strong US retail sales data has also raised expectations that, even under Kevin Walsh's new leadership, the likelihood of the Fed raising interest rates this year is as high as 45%. The strengthening US dollar pushed the yen against the dollar below the key level of 158, raising expectations that Japanese authorities could intervene in the currency markets at any time. The pound fell to a one-month low of 1.3357 against the dollar after UK Health Secretary Wes Sterling resigned, paving the way for a challenge to UK Prime Minister Stammer, further exacerbating the UK's political crisis and weakening the pound. The emerging market currency index fell by 0.2%, with the Thai baht and Korean won leading the decline.