New York: European stock markets slid Wednesday while the dollar rallied as investors reckoned with rising US Treasury yields and the implications for global financial markets
The yield on 10-year US government bonds hit 3.0 percent for the first time in more than four years on Tuesday, and pushed higher still on Wednesday, sparking speculation the US Federal Reserve will accelerate interest rate hikes.
“There is a lot of buzz among strategists about the Fed raising rates three or even four more times this year, which is adding to the nervousness on Wall Street,” said Ken Berman, strategist at Gorilla Trades.
“Rates have been pushed down since the 2008 financial meltdown, and now that they are coming back to ‘normal’ levels, it is creating a lot of confusion and concern.”
Many investors also consider a 3.0 percent or better rate of return on bonds the trigger to shift their money out of riskier stocks, which would drive equities prices lower.
Paris, Frankfurt and London all declined, along with equity markets in Asia.
US stocks finished a choppy session mostly higher, with strong Boeing earnings boosting the Dow, while the Nasdaq fell slightly.
And the surge in US Treasury yields lifted the dollar to a two-month high against the euro.
“Rising yields are a sign of improved confidence in the US economy, a view that if sustained could lead the Fed to raise rates more aggressively,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.
The dollar rally also comes as expectations recede on a possible policy shift by the European Central Bank, which meets Thursday.
Confronted by threats to economic growth and still-sluggish inflation, ECB officials are expected to keep interest rates at historic lows and temper expectations for a quick exit from its massive stimulus program for the eurozone.
US media giant Comcast on Wednesday confirmed its £22-billion ($31-billion, 25-billion-euro) offer for Sky.
The news, which threatened to derail media mogul Rupert Murdoch’s attempt to take full control of Sky, sent shares in the British pay-TV giant soaring 3.9 percent to top the gainers board on the FTSE 100.
Comcast jumped 2.7 percent.
Key figures around 2100 GMT
New York – Dow: UP 0.3 percent at 24.083.83 (close)
New York – S&P 500: UP 0.2 percent at 2,639.40 (close)
New York – Nasdaq: DOWN 0.1 percent at 7,003.74 (close)
London – FTSE 100: DOWN 0.6 percent at 7,379.32 (close)
Frankfurt – DAX 30: DOWN 1.0 percent at 12,422.30 (close)
Paris – CAC 40: DOWN 0.6 percent at 5,413.60 (close)
EURO STOXX 50: DOWN 0.7 percent at 3,485.83 (close)
Tokyo – Nikkei 225: DOWN 0.3 percent at 22,215.32 (close)
Hong Kong – Hang Seng: DOWN 1.0 percent at 30,328.15 (close)
Shanghai – Composite: DOWN 0.4 percent at 3,117.97 (close)
Euro/dollar: DOWN at $1.2168 from $1.2233 at 2100 GMT
Dollar/yen: UP at 109.39 yen from 108.82
Pound/dollar: DOWN at $1.3924 from $1.3978
Oil – Brent North Sea: UP 14 cents at $68.05 per barrel
Oil – West Texas Intermediate: UP 35 cents at $68.05 per barrel
AFP