European shares dip as bond market sends worrying signals
London: European shares opened slightly lower on Wednesday, with most sectors except financials in the red as concerns grow over the direction of the bond market after the 10-year U.S. Treasury went above 2.55 percent for the first time since March 2017.
The STOXX 600 index fell 0.3 percent with all major bourses trading in negative territory. Germany’s 10-year bond yield hit its highest level since an October European Central Bank meeting, when policymakers first announced the extension of its bond-buying scheme.
“Calls for a slightly negative open can be attributed to Asian equities losing steam despite another quartet of Wall St records, as some call a bear market for bonds (yields up, prices down) and a market turnaround”, Accendo Markets analysts told their clients.
“Have we finally entered a bond bear market?”, Rabobank also asked this morning, while DNB noted that “yields weigh on dividend sectors”.
Banks gained as higher interest rates typically generate more revenues and profits for lenders.
RBS rose 2.5 percent, Deutsche Bank was up 2 percent and HSBC added 1.5 percent.
Energy stocks also added a few points to the index as oil prices stayed robust due to production cuts and a fall in U.S. inventories.
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