Market Jitters: German Bonds Snap 5-Day Losing Streak as Stocks Plummet Amid US Election Uncertainty
- In the European bond market, German bonds rose for the first time in five business days, breaking a four-day streak of declines.
- The outlook for the ECB's interest rate cuts, as reflected in short-term money markets, remains almost unchanged from the previous weekend.
- European stocks are falling, with a strong sense of caution in the market as the US presidential election approaches.
European Bond Market Sees Uptick Amid US Presidential Election Uncertainty
In the European bond market, German bonds rose for the first time in five business days, breaking a four-day streak of declines. This development comes as polls for the US presidential election revealed data showing Democratic candidate Vice President Harris leading in Iowa, a state that Republican candidate Trump won in 2016 and 2020.
The outlook for the ECB’s interest rate cuts, as reflected in short-term money markets, remains almost unchanged from the previous weekend. It rose to 28 basis points (bp, 1bp = 0.01%) in December, and 122bp by the end of next year.
European Stocks Experience Caution Amid US Presidential Election
European stocks are falling, with a strong sense of caution in the market as the US presidential election approaches. Bank stocks and energy stocks performed well, and downside was limited.
The STOXX Europe 600 Index fell 0.3%. Danish pharmaceutical company Novo Nordisk was sold, pushing the index lower. Bank stock indexes by industry are at their highest since 2015. Britain’s NatWest Group, whose investment rating was upgraded by analysts, contributed to the rise.
Fueled by high crude oil prices, oil stocks were also bought. Speculation regarding M&A (corporate mergers and acquisitions) also moved individual stocks. Britain’s Burberry Group, which has been rumored to be interested in a takeover, is on the rise.
Eyewear maker Essilor Luxottica also rose sharply, as speculation has resurfaced that US Meta Platforms is considering acquiring a stake. Meanwhile, French power equipment manufacturer Schneider Electric, which fired its CEO after just a year and a half, fell.
Market Data
| Stock | Closing Price | Previous Business Day Change |
|---|---|---|
| STOXX European Stocks 600 | 509.21 | -1.69 (-0.33%) |
| UK FT100 | 8,184.24 | +7.09 (+0.09%) |
| German DAX | 19,147.85 | -107.12 (-0.56%) |
| France CAC | 40,7371.71 | -37.40 (-0.50%) |
Bond Market Data
| Bond | Latest Yield | Previous Business Day Change |
|---|---|---|
| Japan-Philippines German government bond 2-year | 2.26% | +0.02 |
| German government bond 10-year | 2.40% | -0.01 |
| UK 10-year bond | 4.46% | +0.01 |