It is the same story as it has been for stocks in Europe. There was a more choppy mood in the past two days but now we’re starting to see the downside risks take over in trading today.
The Eurostoxx is down 0.7% with Germany’s benchmark DAX also down by 0.7%. Meanwhile, France’s CAC 40 index is down by roughly 1% on the day after the opening hour or so.
The key driver remains higher oil prices. And that in turn is also driving higher bond yields in the region ahead of the ECB policy decision tomorrow.
Brent crude oil briefly clipped the $100 mark earlier and oil prices continuing to rise is just making things a little more uncomfortable for equities at the moment.
Despite higher yields, we are seeing banking stocks get dragged lower with Deutsche Bank down 1.3% in Germany. And in France, the likes of Société Générale, BNP Paribas, and Credit Agricole are all also trading lower.
The focus at the moment is not so much on the move higher in yields itself, but rather the signal from it. That being inflation fears, growth worries, and tighter financial conditions.
Airbus is also a drag today, down 1.7%, adding to weakness in industrial and defence-related names in the DAX. Meanwhile, LVMH is also sitting lower by nearly 2% – falling to its lowest since 2020 – as luxury stocks continue to be hammered.
One of the key exceptions to the selling today is energy stocks, which are thriving in this environment. The Stoxx Europe 600 oil & gas index is seen up 0.7% so far today.
Looking across the Atlantic, US futures are keeping more tentative after yesterday’s drop. S&P 500 futures are flat with Dow futures down 0.1% and Nasdaq futures up 0.1%.
Wall Street remains in a more cautious mood, with investors now turning much of their focus and attention to the US CPI report on Friday next.
This article was written by Justin Low at investinglive.com.