Europe open: Risk-off sentiment sees stocks tank early on
Stocks across Europe dropped sharply on Thursday morning as investors' appetite for risk declined in the wake of declines on Wall Street and Asian indices overnight.
The pan-European Stoxx 600 Index was down 0.9% at 441.14 after an hour's trade, with falls of over 1% seen across London, Paris, Milan and Madrid. Frankfurt's DAX index, however, was holding up relatively well, trading down just 0.5%, helped by decent gains from heavyweights SAP and Merck.
"Technology stocks are outperforming in Europe while real estate and autos are struggling as investors digest earnings on Wall Street from Netflix and Tesla," said Victoria Scholar, head of investment at Interactive Investor.
Ongoing geopolitical tensions in Israel and neighboring regions were continuing to weigh on sentiment, as oil prices hit a two-week high on supply concerns and gold prices reached a four-week high on safe-haven demand.
Meanwhile, with US economic data continuing to beat market expectations, Treasuries were sold off, resulting in a fresh 16-year high for 10-year bond yields, leading to significant selling pressure on US and Asian stocks.
"The surge in US Treasury yields had a ripple effect on regional bond markets in Asia. In particular, Japanese government bond yields climbed to levels not seen in a decade, reflecting the broader trend of increasing interest rates and bond yields in the region," said Patrick Munnelly, market expert at Tickmill Group.
In European company news, shares of B2B software giant SAP were up 5% after third-quarter operating profits rose to €2.28bn, from €2.08bn a year before, helped by strong growth in cloud revenues.
Merck, the German healthcare, life sciences and electronics firm, was also rising 5% after guiding to a return to organic sales growth in 2024 after a flat 2023.
Nokia was out of favour after reporting a 45% drop in net profits in the third quarter, as it announced job cuts in the region of 9,000 to 14,000.