Bonds And Stocks Fall As Inflation Returns: Markets Wrap

European bonds and stocks tumbled after the latest round of price data revealed that inflation in the eurozone may still be on the rise.

Germany’s 10-year yield increased by up to six basis points to 2.57% after data indicated that inflation increased in four of six German states in August, ahead of estimates for the German economy as a whole anticipated later Wednesday. According to a different report, Spanish inflation has also accelerated.

The Stoxx Europe 600 fell, with utilities underperforming, as Orsted A/S fell more than 20% after the Danish power generator forecasted potential impairments of up to $2.3 billion in its US portfolio. Prudential Plc, among other individual movers, rose more than 4% after reporting an increase in new business profit.

The German and Spanish inflation readings have complicated the waters for European policymakers as they prepare to make a rate decision in September. The market expects the European Central Bank to raise interest rates by a quarter point to 4% next month. Data suggesting that eurozone economic confidence dropped more than expected this month further clouded the outlook.

US market futures fell after the S&P 500 rose by the most since June on Tuesday, after unexpectedly weaker job and consumer-confidence figures in the US on Tuesday fuelled hopes that the Federal Reserve is nearing the end of its tightening cycle. HP Inc. fell nearly 10% in premarket trade after the technological hardware major reduced its full-year cash flow and earnings forecast. Treasury rates increased slightly, while the dollar index remained stable.

Investors will be watching data on US economic growth later Wednesday to determine the economy’s resilience in the face of high interest rates.

The MSCI Asia Pacific Index fell from its highs in Asia as the strong surge in Chinese equities markets faded. Benchmarks had earlier surged, with the Hang Seng Index jumping as high as 1.4%, as Chinese state-owned lenders were reported to be planning to lower interest rates on the bulk of outstanding mortgages and deposits.

The crypto space traded down after Bitcoin gained more than 6% the previous session as a US court verdict potentially opened the way for the country’s first Bitcoin ETF.