European stock market open: Stocks ease slightly as the rally takes a breather
Well, it looks like the European stock market party is finally running out of a little steam. The music hasn’t completely stopped but investors are certainly turning down the volume as we head into the final trading day of the week.
The opening mood is erring more on the cautious side after the more subdued showing in Wall Street overnight. The declines aren’t anything that jumps out of the page and after the strong gains earlier this week, perhaps a little check back was overdue. Here’s how things are looking at the open:
- Eurostoxx -0.2%
- Germany DAX -0.3%
- France CAC 40 -0.1%
- UK FTSE -0.1%
- Spain IBEX flat
- Italy FTSE MIB -0.1%
US futures aren’t offering much help with the market mood to start the day either, with S&P 500 futures down 0.1% and Nasdaq futures lower by 0.2%.
The bigger headache for equities right now is the bond market. Treasury yields have pushed higher again this week with 10-year yields climbing to 5.12% today as traders reassess the prospects of a more hawkish Fed. So, that’s hardly the sort of backdrop that makes chasing stocks near record highs an easy proposition.
And that is not to say that Europe isn’t immune to that pressure. If the tech selloff extends further and sours the broader market mood, that can in turn come and bite at European stocks too. And with the DAX pushing towards record territory this week, a little profit-taking wouldn’t exactly be all too surprising.
Looking ahead, the focus turns to the US producer price inflation data later today. That could offer another indication of whether the bond market has more ammunition to push yields higher to wrap up the week.
For now, this looks more like a pause than a proper reversal – at least in Europe. But still, the bulls might find it tough to keep the party going if bond yields refuse to play nice. So, do keep an eye out for that before the weekend and as we head to next week.
