Eurostoxx -0.8%
Germany DAX -0.4%
France CAC 40 +0.1%
UK FTSE +0.1%
Spain IBEX +0.2%
Italy FTSE MIB -0.5%
It’s a mixed start to the day in Europe, though the broader mood is leaning more towards the softer side. German and Italian stocks are struggling the most, even if the likes of France and Spain are managing to hold on to marginal gains.
The more cautious mood we’re seeing here is not all too surprising after the beatdown in Wall Street yesterday, with the S&P 500 falling by 1.1% and Nasdaq slumping by 1.9%. The hotter-than-expected US CPI report certainly didn’t help, with investors having to reassess the prospect of the Fed keeping interest rates “higher for longer”.
Having said that, the bigger concern appears to be the ongoing pressure on tech stocks – especially those tied to the AI boom. The latest fall is now starting to question whether the breadth and the momentum of the resilience in the past few weeks are all starting to fall apart .
The fact that 10-year Treasury yields are now down to 5.10%, their lowest in three weeks, suggest that investors are looking beyond the immediate moves in bond yields.
As such, that creates a bit of an uncomfortable backdrop for European stocks. For now, there is some relief from falling bond yields in general. But with inflation concerns still lingering and Wall Street coming under pressure, investors aren’t exactly rushing to take on more risk.
We’ll have to see if and how US stocks can hold up later in the day to have a better sense of risk appetite in the second half of this week.
This article was written by Justin Low at investinglive.com.
