European Stocks Face Selling Pressure After Bond Yields Advance

Bridgette Randall
29 May, 2024
Frankfurt

The sharp selloff in the bond market weighed on stock market indexes, and the euro held its ground. 

Bonds in the Euro Area sold off after the U.S. Treasury auction of 2-year and 5-year notes was weaker than anticipated. 

The U.S. Treasury yields jumped following the unexpected weakness in the auction and sparked a selloff in worldwide bonds. 

The yield on the 10-year German Bund increased to a 6-month high, the French bond yield advanced to a one-month high, and the UK 10-year government bond yield jumped to a three-week high. 

Investors also pared back rate-cut expectations amid slow progress on disinflation and hawkish comments from policymakers in the U.S. and Europe. 

Investors are also looking forward to the release of Germany's consumer price inflation data later in the day. 

Benchmark indexes in London, Paris, and Frankfurt traded down, and crude oil prices advanced amid rising tensions in the Middle East. 

 

Spain's Retail Sales Growth Slowed In April 

Spain's retail sales increase slowed for the third month in a row, according to the data released by the statistical agency INE. 

Retail sales in April rose 0.3% from a year ago, after an upwardly revised 0.9% increase in the previous month. 

Retail sales rose at the slowest pace since November 2022, after spending on food and non-food items rose at a significantly slower pace. 

On a monthly basis, Spain's retail sales rose 0.8%, reversing a 0.4% fall in the previous month. 

In the first four months to April 2024, retail sales rose from a year ago by 0.9%. 

 

Europe Indexes and Yields

The DAX index decreased by 0.6% to 18,571.37; the CAC-40 index fell by 0.9% to 7,985.61; and the FTSE 100 index decreased by 0.2% to 8,234.89. 

The yield on 10-year German bonds edged up to 2.62%; French bonds inched higher to 3.11%; the UK gilts edged lower to 4.35%; and Italian bonds inched higher to 3.93%.

The euro edged higher to $1.084; the British pound inched higher to $1.274; and the U.S. dollar gained to 91.34 Swiss cents.

The euro approached a record high against the Japanese yen on the speculation that the European Central Bank is likely to take a slower approach to lowering its interest rate compared to the U.S. Federal Reserve. 

The yen fell to this month's low of 170.44 and approached a record low of 171.56 against the euro. 

Brent crude increased $0.17 to $84.75 a barrel, and the Dutch TTF natural gas fell by €0.21 to €33.31 per MWh.

 

Europe Stock Movers

International Distributions Services advanced 4% to 334.0 after the parent company of Royal Mail accepted a £3.57 billion takeover proposal from EP Group, controlled by Czech billionaire Daniel Kretinsky. 

BHP Group gained 2.1% to 2,384.0 pence on a report that the mining company has requested Anglo American to extend the deadline for a final takeover proposal worth £39 billion. 

Oil explorers and refiners extended gains for the second day in a row amid rising tensions in the Middle East, and traders hoped that the OPEC member nations would extend production cuts at the next meeting this Sunday. 

BP plc gained 1.6% to 493.60 pence, Shell PLC jumped 1.7% to 2,827.0, and TotalEnergies SE gained 0.4% to €66.43.