Europe: Higher yields weigh on shares, luxury stocks enter bear market territory

EUROPEAN shares fell for a fourth day on Tuesday, with rate-sensitive technology and real estate stocks pressured by surging bond yields, while fears over a sputtering Chinese economy sent a gauge of luxury stocks into bear market territory.

The pan-European Stoxx 600 shed 0.6 per cent to close at a more than 11-week low.

Technology stocks, whose valuations come under pressure as yields rise, slid 2.0 per cent, while real estate stocks eased 1.9 per cent on expectations interest rates in the United States and Europe will not fall soon.

Germany’s 10-year government bond yield, the euro area’s benchmark, edged up to 2.796 per cent, having briefly hit a 12-year high of 2.813 per cent in early trade. The benchmark US 10-year Treasury note yield hit 4.5660 per cent earlier, its highest since October 2007.

“If the US 10-year yield moves to 4.75 per cent we will most likely begin seeing widening cracks in equities as the prevailing narrative of falling inflation collapses,” strategists at Saxo Bank said.

Meanwhile, a gauge of top European luxury goods stocks fell as much as 20.05 per cent from a record peak in May, a drop that would confirm the index is technically in bear-market territory

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.European luxury giants LVMH and Richemont weakened 1.4 per cent and 3.0 per cent as investors remain concerned about a disappointing post-pandemic recovery in China and faltering sales in the United States.

Equity markets across the globe have come under pressure in recent days as the Federal Reserve and European Central Bank policymakers signalled the central banks are nearly done hiking interest rates but will keep them higher for longer.

Norwegian hydrogen company Nel tumbled 11.0% to the bottom of the Stoxx 600 due to weak sentiment among hydrogen stocks.

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US: Stocks fall after lackluster consumer data

Carmat slumped 30.4 per cent to an all-time low after the French artificial heart maker said it would miss its full-year sales target amid supply issues and warned it could run out of cash by the end of October.

ASM International fell 1.6 per cent after the Dutch chip equipment maker raised its revenue expectations for 2025, although the updated target failed to excite analysts.

British online fashion retailer ASOS slipped 1.5 per cent after it reported a 15 per cent fall in fourth-quarter sales and forecast earnings around the bottom of its guided range. REUTERS