European Stocks Plunge as Fiscal Risks, Energy Prices Weigh on Market
The European stock market started October on a downward trend, marking the beginning of the final quarter of the year. The pan-European index fell by 1.3%, touching its lowest level in over three months.
France's CAC 40 dropped 1.6%, Germany's DAX declined 0.9%, and London's FTSE lost 1.7%. The slump is attributed to a surge in sovereign bond yields, escalating European fiscal risks, and entrenched energy-price inflation driving broad-based liquidations across continental trading desks.
The yield on the benchmark 10-year German bund touched 3.6526% earlier this week, its highest level since June 2009. French Prime Minister Sébastien Lecornu's upcoming budget unveil has added to the anxiety, targeting €54 billion in spending cuts to address a deficit projected at 5.4% of GDP.
The persistent high borrowing costs are raising debt-servicing burdens for corporations and mortgage holders while straining public finances across the single-currency bloc. The deteriorating geopolitical backdrop in the Middle East has kept global oil prices elevated, with regional economies feeling the direct economic impact of high fuel costs.