European Bond Yields Hit Record Lows as Stocks Tumble

Global stocks wilted Thursday and European government-bond yields touched all-time lows as investors favored assets perceived as safe.

The Stoxx Europe 600 fell 0.9% in morning trade after a softer tone in the Asian trading session rippled overseas.

Data out on Thursday showed consumer inflation in China eased in May for the first time in eight months, missing economists’ expectations and ramping up hopes for further Chinese stimulus.

In Europe, mining and energy shares led losses as commodity prices erased gains to turn lower early in the session.

ENLARGE

People look at the electronic stock indicator of a securities firm in Tokyo on Thursday. Most global stock indices were lower Thursday, as investors poured into the safety of government bonds. Photo: Associated Press

Brent crude oil was down 0.6% at $52.20 a barrel after settling Wednesday at its highest level since October. Copper prices fell 0.3% to $4,567 a ton.

As investors shed risk, the 10-year German bund touched a new record low yield of 0.035%, according to data from Tradeweb.

In an effort to lift growth and inflation, the European Central Bank has bought more than a trillion euros worth of bonds, helping suppress yields in the eurozone.

ECB President Mario Draghi warned in a speech in Brussels on Thursday morning that a lack of economic reforms is making the bank’s job harder.

“If other policies are not aligned with monetary policy, inflation risks returning to our objective at a slower pace,” he said.

The 10-year U.K. gilt yield returned to its all-time low of 1.222%. Yields fall as prices rise.

Futures pointed to a 0.4% opening loss for the S&P 500, after three consecutive sessions of gains left it within 0.6% of its all-time high. Changes in futures don’t necessarily reflect market moves after the opening bell.

Earlier, shares in Japan ended 1% lower following disappointing data on core machinery orders, while Australia’s S&P ASX ASX -0.51 % 200 lost 0.2%.

The Kospi was little changed after South Korea’s central bank unexpectedly cut its main policy rate to a record low.

Markets in Shanghai, Taiwan and Hong Kong were closed for a holiday.

In currencies, the euro fell 0.3% against the dollar to $1.1367, while the dollar fell 0.4% against the yen to ¥106.4300.

Gold was steady at $1,262 an ounce.

—Mark Magnier and Tom Fairless contributed to this article.

Write to Riva Gold at [email protected]