Shares steady and bond selloff eases ahead of US jobs data amid Iran-war energy shock

European shares rose in early trade on Friday 2 October as turbulence in bond and currency markets eased ahead of the US September jobs report. 1 2 CNA reported the pan-European STOXX 600 up 0.8 per cent, though still heading for a weekly drop of about 1 per cent. The Hindu reported early gains of 0.5% for the FTSE 100, 0.6% for the CAC 40 and 0.8% for the DAX. 1 2 Asian markets were weaker. Japan's Nikkei fell 0.9%, and Hong Kong's Hang Seng dropped about 2.6–2.7%, its lowest level since July by The Hindu's account. Mainland Chinese markets were closed for a holiday. South Korea's Kospi rose 0.5% and Australia's S&P/ASX 200 gained 0.8%. 1 2

US stock futures edged up: CNA reported Nasdaq futures up 0.7% and S&P 500 futures up 0.4%, while The Hindu said Treasury yields held steadier early on Friday. 1 2 In Europe, longer-dated government bond prices rose, but those of more indebted countries such as France and Italy lagged Germany's. The German 10-year yield fell 6.5 basis points and the French 10-year yield fell 4 bp to 4.892 per cent. The gap between the two reached 149 bp, the widest since the 2012 euro zone debt crisis. 1 George Lagarias, chief economist at Forvis Mazars, said he would not call it a crisis yet but that it had the potential to become one if it continued for a couple more weeks. 1

The US 10-year Treasury yield was around 5.24% on Friday, after reaching 5.34% on Thursday, the highest since 2002 according to The Hindu (CNA called it a 24-year high). Japan's long-term bond yields hit multi-decade highs on Friday. 2 1 Both outlets link the bond selloff to the Iran war: CNA cites higher energy prices complicating the inflation outlook and straining public finances, and The Hindu cites inflation pressure from the energy shock plus rising US government debt. T. Rowe Price's David Clewell said a rise toward 5.5% to 6% was a credible possibility and that 5% had been an important psychological threshold. 1 2 Forecasts centre on a gain of 90,000 nonfarm payrolls in September with unemployment steady at 4.1 per cent. CNA said a hot print could revive bets on a second Federal Reserve rate rise this month, currently priced at 25 per cent, with a December move fully priced in. The Hindu noted the Fed raised rates in September for the first time in three years. 1 2

Chris Weston of Pepperstone said a hot wages print could be particularly influential for US rates, Treasuries and the dollar, and that a sustained rise in term premium could be far more problematic for risk assets. 1 In currencies, the euro was around $1.1255–1.1257 after hitting its lowest since May 2025 on Thursday, and the dollar index was at 101.89, set for a third weekly gain. The yen firmed to about 157.6 per dollar after Tokyo underlying inflation accelerated to 2.7% in September. CNA suggested the European bond rout may have driven safe-haven flows to Treasuries, the dollar and the Swiss franc. 1 2 Oil fell: Brent was down 2.3% at about $100 a barrel (The Hindu: $99.95, versus about $72 in late February before the war) and US West Texas Intermediate fell 3.4% to $89.69. CNA attributed the drop to signs of recovering Middle East supplies and EU talks on releasing diesel stockpiles; The Hindu pointed to uncertainty over a US-Iran de-escalation. 1 2

The Hindu added that the US is sending thousands of troops and a third aircraft carrier to the West Asia, according to a US official, after President Donald Trump on Wednesday threatened to "blow them up" or make a deal, referring to Iran. 2