LDN - Business

World shares are mixed after a Japanese government bond auction falls flat

[May 28, 2025] By ELAINE KURTENBACH

World shares are mixed after a closely watched auction of 40-year Japanese government bonds fell flat as worries mount over growing levels of debt.

In early European trading, Germany's DAX gained 0.2% to 24,283.71, while the CAC 40 in Paris was up 0.3% at 7,847.20. Britain's FTSE 100 rose 0.2% to 8,794.80.

The future for the S&P 500 slipped 0.1% while that for the Dow Jones Industrial Average was down 0.2%.

In Asian trading, Japan's Nikkei 225 index was nearly unchanged at 37,722.40.

Government debt and bonds have become an increasingly important issue for markets in wealthy countries in recent weeks as yields have climbed around the world.

Wednesday’s auction of about 500 billion yen (about $3.5 billion) drew a bid-to-cover ratio of just 2.21, the lowest level since July 2024. The ratio of the amount of bonds offered versus the amount of bids received is seen as a measure of demand. When demand is slack, bond prices fall and yields rise.

After years of pumping money into the economy through hefty bond purchases, Japan's central bank has been gradually cutting back, undermining demand at a time when other institutional investors also have been buying fewer JGBs.

A recent auction of 20-year JGBs also found relatively few buyers. But analysts said worries eased a bit after Japan’s Finance Ministry recently sent a questionnaire to bond investors that they took as a signal of efforts to calm the market by suggesting it might issue less debt.

When yields softened earlier in the week in Japan, the bond market rallied, Thomas Matthews of Capital Economics said in a report. The “somewhat soft 40-year JGB auction seems to have contributed to a slight souring of the global mood,” he said.

The dollar fell to 144.16 Japanese yen from 144.36 yen. The euro rose to $1.1322 from $1.1329.

Elsewhere in the region, Hong Kong's Hang Seng index lost 0.5% to 23,258.31, while the Shanghai Composite index ended flat at 3,393.93.

Australia's S&P/ASX 200 edged 0.1% higher to 8,396.90. The S&P/NZX 50 in New Zealand fell 1.8% after the central bank cut its benchmark interest rate by 0.25 percentage points, as expected, to 3.25%.

In South Korea, the Kospi jumped 1.3% to 2,670.15, helped by a global rally in technology shares. Samsung Electronics' shares climbed 3.7% while SK Hynix was up 2.7%.

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A dealer watches computer monitors at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, May 28, 2025. (AP Photo/Lee Jin-man)

In Taiwan, the Taiex added 0.1%. India's Sensex slipped 0.1%.

Oil prices rose after the U.S. authorization to Chevron to export crude from Venezuela expired Tuesday. The Trump Administration has been trying to wind down U.S. reliance on Venezuelan energy.

U.S. benchmark crude oil gained 45 cents to $61.35 per barrel. Brent crude, the international standard, was up 42 cents at $63.99 per barrel.

On Tuesday, Wall Street resumed its roller coaster ride created by U.S. President Donald Trump’s trade policies after he delayed his threatened 50% tariff on imports from the European Union. U.S. markets were closed for Memorial Day on Monday, and the S&P 500 leaped 2.1% in its first trading since Trump's announcement.

The Dow Jones Industrial Average added 1.8% and the Nasdaq composite gained 2.5%.

Nvidia rallied 3.2% and was the strongest single force driving the S&P 500 higher ahead of its profit report coming on Wednesday. It’s the last to report this quarter among the “Magnificent Seven” Big Tech companies.

Talks with the EU have raised hopes the United States can reach a deal with one of its largest trading partners, helping to keep global commerce moving and avoiding a possible recession. Trump declared a similar pause on his stiff tariffs for products coming from China earlier this month, which launched an even bigger rally on Wall Street at the time.

Surveys have shown U.S. consumers are concerned over the economy’s prospects and where inflation may be heading because of tariffs.

However, a report Tuesday by the Conference Board said confidence among U.S. consumers has improved more in May than economists expected.

Treasury yields eased to take some of the pressure off the stock market. The yield on the 10-year Treasury fell to 4.47% early Wednesday from 4.51% late Friday. It had risen last week, in part because of worries about the U.S. government’s rapidly increasing debt.

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