European Stocks Slide as Oil and Bond Yields Squeeze Risk Appetite

European equity markets began the session with losses across the region.

• The Eurostoxx fell 0.7%.
• Germany's DAX dropped 0.8%.
• France's CAC 40 declined 0.6%.
• The UK FTSE slid 0.4%.
• Spain's IBEX lost 0.4%.
• Italy's FTSE MIB decreased 0.5%.

The day's declines follow a record session on Wall Street the previous day, with the S&P 500 and Nasdaq hitting fresh highs. However, that momentum has not carried over, as Asian and European investors show a similarly cautious mood this morning.

Rising oil prices are one factor limiting risk appetite. Brent crude traded back above $100 as markets assess recent Houthi attacks on Saudi Arabia and potential supply disruption from a storm approaching the Gulf of Mexico.

This keeps inflation concerns in focus, with bond yields at uncomfortable levels for equities. The 10-year Treasury yield is pushing back above 5.30%, threatening a run toward multi-decade highs.

Some relief came from France, where government bond yields eased after Marine Le Pen pledged spending cuts. But the respite appears brief: 10-year French bond yields rebounded to 4.83% today from a low of 4.70% the previous day.

US futures are little changed, leaving the broader market mood tentative. S&P 500 futures are flat, while Nasdaq futures are down just 0.1%.

Attention now turns to the $39 billion US 10-year Treasury auction and the Federal Reserve's September meeting minutes later today, both of which could put rates back at the center of market discussion.