European shares are closing mostly higher on Friday, but the gains were not enough to erase losses for most of the major indices this week. The broader STOXX 600 is also on pace for a weekly decline as elevated bond yields and oil prices continue to weigh on sentiment.
European closing levels:
- German DAX, +0.59% at 26,136.57
- France’s CAC, +0.37% at 8,484.44
- UK’s FTSE 100, +0.64% at 10,816.57
- Spain’s Ibex, +0.76% at 19,961.50
- Italy’s FTSE MIB, unchanged at 52,668.03
For the trading week, the UK FTSE 100 was the only major index to finish higher:
- German DAX, -1.15%
- France’s CAC, -1.76%
- UK’s FTSE 100, +0.62%
- Spain’s Ibex, -0.97%
- Italy’s FTSE MIB, -1.71%
European benchmark 10-year yields are marginally higher today:
- Germany 10-year: 3.261%, +0.6 basis points
- France 10-year: 4.133%, +1.6 basis points
- UK 10-year: 5.069%, +0.2 basis points
- Spain 10-year: 3.717%, +1.3 basis points
- Italy 10-year: 4.084%, +1.8 basis points
For the week, benchmark 10-year yields moved higher across the board:
- Germany: +4.9 basis points
- France: +8.1 basis points
- UK: +2.2 basis points
- Spain: +6.0 basis points
- Italy: +9.1 basis points
The rise in yields was particularly notable in France and Italy, with European bond markets remaining under pressure from inflation concerns, heavy sovereign debt issuance and shifting expectations toward a more hawkish ECB.
As a London/European traders had for the exits,the USD has given up some of their declines but the AUD and the NZD remain solidly higher as they follow things like gold which is up strongly. In contrast, the CHF is now lower after SNBs Tschudin said that the CHF weakness is because of other countries higher inflation expectations and that Swiss inflation is low because of low inflation expectations. That sent the USDCHF higher:
- AUD: +0.83% vs USD — strongest performer
- NZD: +0.61% vs USD
- CAD: +0.18% vs USD
- GBP: +0.10% vs USD
- EUR: +0.03% vs USD — little changed
- JPY: -0.07% vs USD — the only major currency weaker against the dollar
And then there was the CHF:
- CHF: +0.10% vs USD
U.S. stocks are trading higher across the board, rebounding from yesterday’s sharp declines.
- Dow: +410.04 points, or +0.78%, at 53,174.31
- S&P 500: +40.86 points, or +0.53%, at 7,682.01
- Nasdaq Composite: +140.22 points, or +0.54%, at 26,207.38
- Russell 2000: +22.89 points, or +0.76%, at 3,015.33
- Nasdaq 100: +119.52 points, or +0.41%, at 29,332.68
The gains are relatively broad-based, with the Dow and Russell 2000 leading on a percentage basis, while the Nasdaq 100 is lagging but still solidly higher. Despite today’s rebound, the major indices remain on pace for losses for the week.
U.S. Treasury yields are moving sharply higher across the curve, with the largest increase at the front end.
- 2-year: 4.232%, +4.7 bps
- 5-year: 4.421%, +3.4 bps
- 10-year: 4.734%, +3.6 bps
- 20-year: 5.260%, +3.4 bps
- 30-year: 5.273%, +3.6 bps
The move represents a renewed selloff in Treasuries, with yields reversing some of Wednesday’s decline following the Treasury’s announcement that it would increase buybacks of longer-dated debt. Despite that intervention, concerns over U.S. debt, inflation and heavy borrowing needs continue to put upward pressure on yields.
The 10-year is back above 4.70% (the high was 4.748%) , while the 30-year remains above 5.25% and moving closer to the high for the week at 5.337%(and highest since 2007), keeping longer-term borrowing costs elevated.
As mentioned:
- Gold is now up $106 (see post here) t0 $4623 or 2.33%
- Silver is up $1.76 to $69.80 or 2.58%
- Crude oil is trading above and below unchanged at $86.90.
This article was written by Greg Michalowski at investinglive.com.