European stock markets experienced a predominantly downward trend on Thursday, influenced by mounting global bond yields and anticipation surrounding the imminent release of crucial inflation figures toward the week’s end.
As of 03:10 ET (07:10 GMT), Germany’s DAX index showed a 0.3% decline, while the U.K.’s FTSE 100 fell by 0.2%, and France’s CAC 40 managed a modest 0.1% increase.
The downturn in European equities mirrors the preceding weakness observed in Wall Street and Asian markets, exacerbated by the surge in U.S. Treasury yields, which fueled concerns about inflation and prolonged expectations for elevated interest rates.
On Thursday, the two-year U.S. Treasury yield hovered near the 5% mark, while the 10-year yield maintained its robust position, signaling heightened market apprehension.
In Germany, May’s consumer prices surpassed earlier forecasts, adding further weight to the impending release of inflation data across the eurozone on Friday. Projections indicate a year-on-year uptick in eurozone inflation to 2.5% in May from 2.4% in April.
Amid these economic uncertainties, anticipation builds around the European Central Bank’s potential interest rate adjustments in the upcoming week, amplifying investor unease.
Across the Atlantic, market attention pivots to forthcoming gross domestic product data and, notably, the Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s favored measure of inflation, slated for release on Friday.
Several Federal Reserve officials have cautioned against premature considerations of policy adjustments, emphasizing the need for substantial progress on inflation metrics.
In corporate developments, BHP Group (NYSE) shares dipped 1.7% as the mining behemoth opted not to pursue a formal bid for Anglo American (LON), resulting in the abandonment of its proposed $49 billion takeover deal. BHP cited disagreements with Anglo American over South African regulatory risks and costs, highlighting a lack of essential information provided by the latter.
Meanwhile, crude oil prices experienced a downturn on Thursday, overshadowing optimism stemming from a larger-than-expected decline in U.S. inventories, as concerns over heightened borrowing costs prevailed.
At 03:10 ET, U.S. crude futures (WTI) traded 0.3% lower at $79.03 per barrel, while the Brent contract declined 0.3% to $83.1 per barrel.
Data from the American Petroleum Institute revealed a significant decrease of nearly 6.5 million barrels in U.S. oil inventories last week, surpassing expectations for a draw of 1.9 million barrels. This notable draw suggested a resurgence in U.S. fuel demand, coinciding with the commencement of the travel-intensive summer season, often associated with Memorial Day weekend.
