European Markets Respond As US Sees Rate-Driven Mass Selling
LONDON – European stocks rose on Wednesday, seeking to shake off market nerves after a rate-induced massive selloff in the United States in the previous session.
The pan-European Stoxx 600 climbed 0.7% at the start of trading, with retail stocks adding 1.4% to the top gains while oil and gas stocks fell 0.8%.
European investors are watching moves in US markets closely after the Nasdaq Composite fell 2.83% to 14,546.68 on Tuesday to record its worst day since March. The S&P 500 lost 2.04% and the Dow Jones Industrial Average lost 569.38 points, or 1.63%.
Stocks across all sectors fell as the benchmark 10-year Treasury yield peaked at 1.567%, a move that prompted tech stocks to lead the broader markets lower, Facebook, Microsoft and Alphabet. losing more than 3%.
Rising bond yields hurt growth stocks, including technology stocks, as they lower the relative value of future earnings and make popular stocks appear overvalued.
Overnight, Asia-Pacific stocks fell on Wednesday following the fall on Wall Street, while US stock futures edged higher in early pre-market trading.
The focus of European markets today will be on central banks with US Federal Reserve Chairman Jerome Powell, European Central Bank President Christine Lagarde, Bank of Japan Governor Haruhiko Kuroda and Governor of the Bank of England Andrew Bailey, all speaking at the ECB’s Central Banking Forum on Wednesday.
U.S. traders followed Powell’s testimony to the Senate Banking Committee on Tuesday in which the central bank chief said inflation could persist longer than expected.
Data on EU economic sentiment is expected to be released on Wednesday morning.
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– CNBC’s Tanaya Macheel and Eustance Huang contributed reporting for this story.