European stocks largely lower; investors fret over rising yields
Investing.com — European stock markets largely retreated Tuesday, as investors fretted on the prospect for a period of elevated interest rates, creating economic uncertainty.
At 03:45 ET (07:45 GMT), the DAX index in Germany traded 0.5% lower, the CAC 40 in France dropped 0.8%, while FTSE 100 in the U.K. rose 0.2%.
The U.S. Federal Reserve’s hawkish tilt, at its policy meeting last week, continues to reverberate around the global markets, as the yield on benchmark 10-year Treasury notes rose to levels not seen since October 2007.
This has had repercussions in Europe, with Germany’s 10-year bond yield hitting its highest point since 2011, while eurozone yields more widely also increased.
The European Central Bank hinted at a pause in its tightening cycle when it hiked interest rates earlier this month, but President Christine Lagarde seemingly implied, during a speech on Monday, it would be some time before the central bank started cutting interest rates as inflation remains above its medium-term target.
«We consider that our policy rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to our target,» Lagarde said.
ECB Chief Economist Philip Lane spoke at a conference earlier Tuesday, and his comments are being studied carefully, especially ahead of Friday’s release of the preliminary eurozone consumer inflation data for September.
The Bank of England unexpectedly decided to pause its rate-hiking cycle last week, as the U.K. economy struggles. This has weighed heavily on sterling, which sank to a six-month low versus the U.S. dollar, but this has supported many of the FTSE 100's multinational companies, who tend to report their
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