European Shares Slip Amid Rising Bond Yields and Fiscal Concerns
European shares fell close to a one-month low due to a selloff driven by rising bond yields, fueled by fiscal pressures worldwide. The STOXX 600 index saw significant declines, particularly in the real estate sector. Market reactions were influenced by European bond yields and the luxury sector's upgrade.
European shares ended near a one-month low on Tuesday, as a wave of selling triggered by rising bond yields intensified concerns over fiscal challenges across global economies. The pan-European STOXX 600 index dropped by 1.47%, closing at 543.35 points, with the real estate sector leading the downturn, plunging 3.5% to reach a near five-month low.
The spike in bond yields, with German and French bonds hitting their highest levels since 2011 and 2009, respectively, reflects investor anxiety over debt sustainability in several countries. Bond yields increase when prices decline. This shift in focus has caught the attention of investors who are recalibrating their expectations for corporate profitability in light of fiscal tightening.
Despite the widespread selloff, luxury stocks bucked the trend. Supported by HSBC upgrades, companies like Kering and LVMH witnessed gains. Meanwhile, euro zone inflation data indicated a slight rise, bolstering bets on the European Central Bank maintaining rates. As September approaches, over 100 billion euros in European bond issuance is anticipated.
(With inputs from agencies.)
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