European shares closed slightly lower as a global bond selloff eased, pulling oil and natural gas prices back from their intraday highs. The Stoxx Europe 600 index slipped 0.3%, after having been down as much as 1% earlier in the session.
The yield on the 10-year US Treasury retreated below the 5% threshold. Financial services stocks declined following a warning from the chief executive of Bank of America that trading revenues would slow down. The Stoxx Europe 600 has now fallen from the historical high it hit in mid-August after a robust earnings season, as concerns over economic growth mount and rising energy costs drive up global bond yields.
“In Europe, higher interest rates are creating a tricky environment amid sluggish growth, which could weigh on consumption and capital expenditure,” said Louis Puga, a portfolio manager at Societe de Gestion Prevoir in Paris. He added, however, that second-quarter corporate profits and outlooks were strong enough to ultimately help equities weather the bond selloff. Investors are also bracing for a pivotal week of monetary policy decisions, with the Federal Reserve, the Bank of England, and the Bank of Japan all set to announce their next moves.
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