Europe open: Miners, utilities drag markets lower
European stocks declined on Tuesday morning, following Asian markets lower overnight, with mining and utility stocks providing a drag.
The Europe Stoxx 600 Index was falling 0.3% after an hour's trade, after a sell-off on Asian indices which saw the MSCI AC Asia Pacific ex Japan Index drop to its lowest in 2023.
Frankfurt's Dax index was down 0.5%, the Cac 40 in Paris fell 0.6% while Milan's FTSE MIB was 0.7% lower. The FTSE 100 in London and Madrid's Ibex 35 fared a little better, opening flat and down just 0.2% respectively.
Stocks fell across Europe and the US on Monday, giving an underwhelming reaction to a last-minute deal in Washington to avert a government shutdown, after US manufacturing data beat forecasts, raising concerns that the Federal Reserve might soon step in to hike rates to cool the economy.
"The weekend agreement by US lawmakers to fund the government until 17th November, while kicking that problem into the long grass, has merely served to refocus investor attention on the resilience of the US economy," said analyst Michael Hewson from CMC Markets.
"The agreement also shifted the odds towards another rate hike from the Federal Reserve in just under a months’ time given that economic activity in the manufacturing sector appears to have bottomed out in the short term."
Bond yields across the US, UK, Germany and Spain were pulling back on Tuesday after a march higher the previous session.
Tuesday is set to be a quiet day in terms of economic data, with no major indicators due out across the continent. The only notable release was the British Retail Consortium-Nielsen shop-price index, which showed that the annual rate of inflation eased to a 12-month low of 6.2% in September.
Mining stocks were under the weather early as commodity prices pulled back, with Rio Tinto, Glencore, ArcelorMittal and Sandvik trading in the red. Recent dollar strength has hit the price of gold and copper in recent days, with both trading at multi-month lows.
Defensive utility stocks were also out of favour as the yields on government bonds continue to rise. National Grid, United Utilities Engie, RWE and Verbund were all taking losses early.