Euro Stocks Sink Amid Rising Yields, Strong US Growth

European stocks closed lower on Wednesday due to rising yields in both the US and Europe. The main catalyst was the strong US flash composite PMI, which jumped to 58.4 from 56.0. This suggests that the Federal Reserve has room to keep its policy restrictive while also dealing with persistent price pressures.

Richmond Fed President Tom Barkin warned that inflation could prove stubborn, and Fed Governor Michael Barr stated that further policy adjustments are likely to be needed. The eurozone's flash PMIs showed continued expansion in manufacturing and services across all eight countries monitored, but the growth readings were outweighed by the rise in yields.

The European closes were: Germany's DAX fell 0.66% to 25,410.64, France's CAC 40 dropped 0.39% to 8,123.42, the UK's FTSE 100 declined 0.03% to 10,705.25, Spain's IBEX 35 slid 0.62% to 19,632.20, and Italy's FTSE MIB decreased 0.21% to 51,897.50.

The US 10-year Treasury yield rose 11.6 basis points to 5.083%, while the European yields increased: Germany's 10-year yield rose 11.6 basis points to 3.560%, France's 10-year yield climbed 16.8 basis points to 4.660%, and Italy's 10-year yield increased 16.0 basis points to 4.506%.