Stoxx 600 Down Amid High Us Bond Yields

Stoxx 600 Down Amid High Us Bond Yields by Adam Rosen last updated on October 22, 2023

STOXX 600 Down By 0.3% Amid High US Bond Yields

During the 2nd day of the trading week, the shares of European firms continued their losing streak amid a consistent surge in the US T-bond yields. In addition, the dollar remains supported, which is putting pressure on commodities & other risky assets.

In the past few weeks, the data from the US has been very consistent and shows a recovering economy. Similarly, the US government has also managed to avert a shutdown, which provided a much-needed boost to the USD.

After the passage of the funding bill, the US Dollar ended up touching the highest point of the last 11 months. Similarly, the 10-year bond yield is also trading at a multi-year high.

STOXX 600 At Multi-Month Lows

The broad strength in the US Dollar means investors are now less interested in riskier assets such as stocks. As a result, the STOXX 600 index lost 0.3% of its value and was last seen near a 6-month low. In terms of the biggest losers, the mining and the utility sector remains at the top.

Zalando, which is a popular fashion retailer from Germany, also experienced a bad day in the stock market. The fashion retailer's shares dropped by 2.8% after receiving a downbeat forecast from the Deutsche Bank. Similarly, a UK-based company 'Burberry' also slid 3.1% after the rating downgrade by UBS.

On the US side, the NVO stocks went up by 1.9% after the patent office decided not to look at the validity of the Novo-owned patents.

In general, high-interest rates and a supported US Dollar are not the ideal conditions for the European stock markets. That's exactly what we are seeing in the EU stock market these days, as the majority of the stocks are down. However, any downside in the greenback and the US yields will allow the EU stocks to shine once again.

In the short term, the outlook for the EU-based STOXX 600 remains neutral to bearish unless the conditions change.