- Eurostoxx +0.1%
- Germany DAX +0.2%
- France CAC 40 +0.5%
- UK FTSE +0.9%
- Spain IBEX +0.5%
- Italy FTSE MIB +0.2%
It’s a positive start to proceedings in Europe, with modest gains across the board as we get the session underway. The broader advance suggests that investors are still finding some appetite for risk despite the cautious mood in global markets in recent weeks.
Having said that, I wouldn’t read too much into the early gains just yet – even if they are carrying over from the day before.
The US bond market is back in action today and will provide a more important test for broader risk sentiment, especially after the sharp move higher in Treasury yields over the past few weeks. 10-year yields are hovering around 5.19% for now but we are still yet to see how Wall Street will take to the new week later today. For now, traders are still largely weighing the inflation outlook and the risks of further Fed tightening.
In that lieu, the bigger focus will fall on the US CPI report tomorrow. A hotter-than-expected reading could reignite concerns over higher interest rates and put renewed upward pressure on bond yields.
Besides that, Wall Street earnings season will also be getting underway later with the big banks reporting their latest quarterly results. As such, that will add another layer of uncertainty for investors to navigate through this week.
For now though, US futures are more pensive as tech shares continue to be a bit of a drag in the new week. S&P 500 futures are down 0.1% while Nasdaq futures are down 0.7% as we get into European morning trade. So, that offers up some added caution for Wall Street in the run up to the inflation data tomorrow.
As for Europe, the overall mood is holding up relatively well for the time being. But whether the early gains can stick may depend more on what happens in the bond market than anything else.
This article was written by Justin Low at investinglive.com.