Europe stocks retreat after three-day rally as rising yields, oil prices dent sentiment
Autos, however, rose 0.9%
European stocks fell on Wednesday, Oct 7, after a three-day rally, as increasing yields and oil prices dampened sentiment. The pan-European Stoxx 600 index slipped 0.3 percent to 635.02 points by 05:00 GMT. Banks and tech stocks suffered the most, with BE Semiconductor Industries plunging 7.2 percent following a downgrade from UBS.
The firm warned of risks to chip-packaging techniques, like hybrid bonding. However, the auto sector managed to outperform, climbing 0.9 percent after a report suggested the European Union could restrict Chinese hybrid vehicle imports. European stocks have been under pressure as bond market turmoil shows no signs of abating, driven by rising energy prices, persistent inflation, and uncertainty over interest-rate expectations.
US and European bond yields climbed on Wednesday, with French spreads widening due to concerns over France's fiscal situation ahead of the presidential election. Germany's 10-year government bond yield rose 1.6 basis points to 3.4969 percent. Oil prices surged nearly 1 percent, with Brent and WTI prices climbing as traders worried about potential supply disruptions from storms in US oil-producing regions and Houthi attacks on Saudi Arabia, as well as higher Middle East crude supplies.
Analysts noted ongoing concerns about the Middle East situation and high borrowing costs due to rising bond yields. Focus now shifts to Federal Reserve minutes and remarks for clues on interest-rate policy. Investors are watching the Fed's September meeting minutes and Fed officials' statements for insights into the interest-rate outlook.
While expectations of another US rate hike this month have faded due to weaker-than-expected jobs data, markets still expect rate hikes later in the year and beyond. Third-quarter earnings for Stoxx 600 companies are expected to grow 19.4 percent year-over-year, according to LSEG estimates, excluding the energy sector where earnings are forecast to rise 9.9 percent.
Among other stocks, UK's Pennon Group dropped 18.6 percent after the water utility company launched a rights issue to raise £550 million and cut its dividend amid operational challenges.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
