DAX Index Breaks Support Amid Hawkish ECB, Surging UK Yields, FTSE 100 Fares Better
European equities reversed yesterday’s gains, sliding sharply as bond market turbulence and weak sector sentiment unsettled investors.
Quick overview
- European equities experienced a sharp decline, reversing previous gains due to bond market turbulence and weak sector sentiment.
- The German DAX led the downturn, falling over 2% as cyclical sectors like industrials and financials were heavily impacted.
- UK gilt yields surged to a 25-year high, triggering risk-off moves across European assets and raising concerns over corporate margins.
- Despite slightly higher Eurozone inflation data, market expectations for ECB policy remained unchanged, highlighting fragile investor sentiment.
European equities reversed yesterday’s gains, sliding sharply as bond market turbulence and weak sector sentiment unsettled investors.
German DAX Leads the Downside
The German DAX fell by more than 500 points, losing over 2% in a single session, marking the steepest decline among regional peers. The sell-off was broad-based, but cyclical sectors like industrials and financials took the brunt of the hit, with the ECB weighing in with some hawkish comments, despite a weak Eurozone economy and arbitrary price hikes.
DAX hart Daily – The 100 SMA Has Been Broken
UK Yields Surge to 25-Year High
The UK FTSE also closed lower, though its decline was more contained. What caught markets off guard was the 30-year UK gilt yield, which spiked to levels not seen since 1998. This sudden breakout triggered risk-off moves across European assets, with equity indices succumbing to the weight of higher borrowing costs and the potential drag on corporate margins.
Closing Levels for Key European Indices
Germany – DAX Performance Index
- Closed at 23,499.71 points
- Down −537.62 points (−2.24%)
- The sharpest decline among major peers, reflecting weakness in heavyweight industrial and tech stocks.
France – CAC 40 Index
- Settled at 7,660.88 points
- Down −47.02 points (−0.61%)
- Losses were relatively modest, with luxury and energy names cushioning steeper declines.
Spain – IBEX 35
- Ended at 14,737.50 points
- Down −201.90 points (−1.35%)
- Financials and utilities led the pullback, highlighting concerns over domestic growth.
United Kingdom – FTSE 100 Index
- Closed at 9,126.49 points
- Down −69.85 points (−0.76%)
- Weakness in commodities weighed, despite resilience in select consumer staples.
Italy – FTSE MIB Total Return Index
- Finished at 41,833 points
- Down −576.46 points (−1.36%)
- Heavy selling in banking and energy sectors amplified the decline.
Eurozone CPI: Above Forecasts but Limited Impact
In the midst of this volatility, investors received the Eurozone Flash CPI report. While inflation data came in slightly hotter than expected, it did little to alter market pricing or shift expectations for European Central Bank policy. With rate cuts already seen as unwanted by the ECB, markets are digesting the reinforced narrative that monetary easing is off the table for now.
In addition to stop policy easing through another rate decrease, ECB policymaker Schnabel hinted that rate hikes might occur sooner than most people anticipate.
Market Sentiment and Sector Pressures
By the end of the session, all major European indices closed lower, reflecting a synchronized retreat. The French CAC 40 held up better than its peers but still registered losses, while pressure in industrial, banking, and energy stocks amplified the declines elsewhere.
Conclusion: The day highlighted how fragile sentiment remains in European markets. A session expected to be quiet, with only CPI data scheduled, instead turned turbulent as bond yields dictated the tone. With surging UK yields rattling confidence and sector headwinds persisting, investors face a market that is increasingly vulnerable to sharp swings in both rates and equities.
Major European indices closed in the red, reflecting broad-based weakness across the region amid ongoing global uncertainties.
German DAX Index Live Chart
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