European shares hit by rising bond yields, energy-driven inflation concerns
The retail sector fell 2.3%
European stocks suffered on Wednesday (Sep 2) as elevated bond yields and energy-driven inflation concerns took their toll. The Stoxx 600 index closed 0.2 percent lower at 645.94 points, having hit one-month lows earlier in the session. Retailers lagged with a 2.3 percent decline. Worrying inflation indicators were fuelled by Brent crude prices breaching the US$95 mark, amid escalating Middle Eastern tensions.
Europe's vulnerability to the conflict was highlighted due to its high dependence on energy imports. However, strong corporate earnings during the latest reporting season provided some relief, suggesting companies were handling the situation better than anticipated. Yet, concerns about rising prices continue to cast a shadow over the market.
Gordon Kerr, a European macro strategist at KBRA, noted that while the overall outlook remains positive, short-term uncertainty looms due to price worries. The prospect of higher interest rates has investors on edge, with the German 10-year bond yield hitting its highest level since April 2011. Nearly all analysts expect the European Central Bank to raise rates by 25 basis points next week, with a half-percentage point increase by year-end.
Germany's DAX sank 0.5 percent, while France's CAC 40 slipped 0.3 percent after dipping near a two-month low earlier in the session.
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