European Stocks Near Two-Week Lows as Bond Yields Hit Multi-Decade Highs

TLDR

• European stocks hovered near two-week lows after their worst single-day drop in nearly a month
• Germany’s 10-year Bund yield hit its highest level since May 2011 at 3.22%
• Brent crude futures hovered near three-week highs around $91.50 a barrel
• Markets now fully price in a 25-basis-point ECB rate hike at the September meeting
• Traders are watching ECB President Lagarde’s comments and Fed July minutes for direction

European equities struggled to find a clear direction on Wednesday, hovering near the flatline after a sharp selloff the day before. The pan-European Stoxx Europe 600 Index sat near two-week lows, still recovering from its worst single-day drop in nearly a month.

Germany’s DAX fell 0.2%, while France’s CAC 40 edged 0.2% higher. London’s FTSE 100 and Spain’s IBEX 35 were both flat. Euro Stoxx 50 and Stoxx 600 futures were also down around 0.2% in premarket trading.

Tuesday’s selloff was driven by a mix of factors. Escalating threats in the Persian Gulf, rising crude oil prices, and soaring bond yields forced traders to quickly unwind risk positions.

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