European Shares Plunge to One-Month Low Amid Global Bond Rout and Mideast Tensions
European shares have fallen to a one-month low due to global bond rout and escalating tensions in the Middle East. The pan-European STOXX 600 index dropped by 0.3% to 645.42 points, with retailers leading most sectors lower at 1.5%. Brent crude prices traded above $95 a barrel, adding to inflation worries as the US and Iran exchanged fresh strikes overnight.
The conflict between the two countries has been ongoing for months, and Europe is particularly vulnerable due to its reliance on energy imports. However, strong earnings during the latest reporting season have provided some relief to investors.
Mark Haefele, chief investment officer at UBS Global Wealth Management, remains optimistic about Eurozone equities despite the current challenges. He notes that improving activity, stronger earnings, and reasonable valuations support further gains.
The yield on German 10-year bonds hit their highest since April 2011, while investors see a 35% chance that the European Central Bank's deposit rate could reach 3% by March 2027. Banking stocks have helped limit losses on the STOXX index, with Deutsche Bank AG rising 2.2% after Goldman Sachs upgraded its shares to 'buy' from 'neutral'.