With rising yields worrying investors, European stocks are mostly down.
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Date:-26-09-2023
On Tuesday, most European stock markets fell as investors worried about the possibility of an extended period of high interest rates, which would lead to economic uncertainty.
The FTSE 100 in the United Kingdom increased by 0.2%, the CAC 40 in France fell by 0.8%, and the German DAX index down by 0.5% at 03:45 ET (07:45 GMT).
Will the ECB postpone rate reductions?
The hawkish stance taken by the US Federal Reserve during last week's policy meeting is still having an impact on international markets, as the yield on benchmark 10-year Treasury notes reached levels not seen since October 2007.
Europe has felt the effects of this, with rates on German 10-year bonds rising to levels not seen since 2011 and across the eurozone.
When it raised interest rates earlier this month, the European Central Bank gave indications that the cycle of tightening might be pausing. However, President Christine Lagarde seemed to imply during a speech on Monday that it would take some time before the central bank began lowering interest rates as long as inflation remained above its medium-term target.
"We believe that our policy rates have arrived at a point where, if sustained for an adequate amount of time, will significantly aid in the prompt return of inflation to our target," stated Christine Lagarde.
The remarks made by Chief Economist Philip Lane of the European Central Bank at a conference earlier on Tuesday are being closely examined, particularly in light of the preliminary September consumer inflation figures for the eurozone being released on Friday.
Amidst the challenges facing the British economy, the Bank of England made an unexpected decision last week to suspend its rate-hiking cycle. Due to the fact that many of the global corporations in the FTSE 100 announce their results in dollars, this has had a negative impact on sterling, which fell to a six-month low against the US dollar.
the Chinese real estate market
Concerns about the Chinese economy are also growing elsewhere after Bloomberg revealed that a division of troubled real estate developer Evergrande had defaulted on certain onshore notes.
A three-year financial crisis that has severely impacted the property industry, which accounts for a sizable portion of the Chinese economy, has hindered the country's economic progress.
Additionally, as the deadline of October 1 approaches and no budget agreement has been signed, rating agency Moody's issued a warning that a government shutdown in the United States would damage the nation's credit.
A month ago, the U.S. was downgraded by Fitch due to the debt ceiling problem, and Moody's warning jeopardizes the nation's remaining triple-A rating.
A managerial appointment is made by Airbus.
Following the confirmation of Christian Scherer's appointment as CEO of Airbus's primary planemaking operation—the largest aircraft manufacturer in the world—and the return of devoted leadership to the company's main business after a four-year hiatus, the shares of Airbus (EPA:AIR) dropped 0.2%.
The retailer ASOS (LON:ASOS) reported that it now anticipates profit for the year to be near the bottom of its range, citing bad weather during the summer. This news caused the stock to rise 1.8%. The company's failure to make a profit has been seen positively, as the market had already priced in a fall in sales.
Prior to important Chinese activity report, crude declines.
As fears about this year's economic growth in the largest crude importer in the world, China, arose from fresh stress in the country's real estate market, oil prices dipped on Tuesday.
The release of important Chinese purchasing managers' index data for September later this week will undoubtedly draw attention, since beleaguered developer China Evergrande (HK:3333) Group issued a warning earlier this week that it was unable to issue fresh loans.
Although manufacturing activity appeared to be improving in August according to PMI measurements, the growth of the service sector fell throughout the month.
U.S. oil futures were 1.3% lower at $88.54 a barrel by 03:45 ET, while the Brent contract was down 1.3% at $90.73.
Furthermore, gold futures dropped 0.3% to $1,931.65/oz, and the EUR/USD declined 0.2% to 1.0572.
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