Europe's STOXX 600 slipped 0.6% to a one-month low as a fresh bond-market selloff and euro zone inflation above 3% reinforced bets on an ECB rate hike next week. Germany's DAX and Britain's FTSE 100 also retreated, while Novartis, Reckitt Benckiser and Partners Group swung sharply on company-specific news.
The pan-European STOXX 600 slipped 0.6% to a more than one-month low of 647.08 on Tuesday, pressured by a fresh rise in government bond yields. Germany's DAX slipped 1.1% and France's CAC 40 fell 0.4%, while Britain's FTSE 100 eased 0.3% as trading resumed after Monday's public holiday.
Bond yields climb as inflation tops 3%
Euro zone government bond yields climbed to fresh multi-year highs as Europe joined a global bond selloff. Data showed inflation rose above 3% in August, driven by higher energy costs, reinforcing expectations that the European Central Bank will raise interest rates next week. Traders expect a 25-basis-point rate hike, LSEG data showed.
Germany's 30-year government bond yield earlier hit a 15-year high, while France's 30-year yield climbed to its highest level since 2008. Chris Beauchamp, chief market analyst at IG, said: "there is now a much more compelling case to look at bonds for retail investors", as equities begin to dread the prospect of rate hikes around the globe.
Energy costs add to the pressure
European natural gas prices have surged in recent days, with Dutch and British benchmark contracts rising after the first direct exchange of attacks between the U.S. and Iran in a month renewed fears of prolonged supply disruptions. Energy stocks rose 1.8% as Brent crude traded above $92 a barrel.
Hawkish comments from Federal Reserve Chair Kevin Warsh last week, alongside higher energy prices, have prompted investors to price in further rate increases from major central banks. Still, euro zone manufacturing activity grew at its fastest pace in more than four years in August, driven by the strongest rise in new orders since early 2022, an S&P Global survey showed. The STOXX 600 climbed to a record high in early August but has since lost about 2%.
Novartis jumps, Partners Group slides
Novartis jumped 6.3% after the Swiss drugmaker said its oral multiple sclerosis drug remibrutinib met the main goals in two late-stage trials and outperformed a rival treatment. Reckitt Benckiser Group added 4.4% after a U.S. jury sided with its Mead Johnson unit in a lawsuit alleging its Enfamil preterm baby formula caused a serious bowel disease.
Partners Group shed 7.3% after the Swiss private equity firm said its CEO was stepping down and warned its performance income would be lower than expected.
Source: Investing.com
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