- Eurostoxx +0.6%
- Germany DAX +0.8%
- France CAC 40 +0.4%
- UK FTSE +0.8%
- Spain IBEX +0.8%
- Italy FTSE MIB +0.7%
It is a solid start across Europe as the gains are fairly broad-based with Germany and Spain among the stronger performers.
The backdrop is also a little more supportive today as bond yields come off the boil. 10-year Treasury yields have now eased lower to 5.20%, down from the overnight peak of 5.29%. So, that is giving stocks some breathing room after the recent pressure from rising borrowing costs.
That being said, I wouldn’t call this an all-clear just yet. The bond market remains the key risk and after the sharp selloff we have seen recently, it would not take much for yields to kick higher again and put equities back under pressure.
So, I would argue that the mood at the open is cautiously positive rather than outright risk-on. For now, the pullback in yields is helping and that is also reflected in a slight bounce in US futures. S&P 500 futures are up by 0.3% and Nasdaq futures up by 0.2% on the day.
However, investors will still be wary of chasing the equity rebound too aggressively while the rates backdrop remains unsettled.
As long as Treasury yields stay contained, stocks have room to hold the early gains. But all it takes is just another leg higher in yields, and that could quickly test that resilience.
This article was written by Justin Low at investinglive.com.