OPTIMISM FADES: European Markets Fall Into The Red

spain storm in extremadura

Photo: Charly Morlock

ORIGINAL: European markets moved higher this morning, led by banks and mining companies.Early into trading, the DAX is up 0.62 per cent, the CAC 40 is up 0.64 per cent, and the only market in the red is the Spanish IBEX 35, down 0.27 per cent.

The biggest news out of Spain so far this morning is that the government will pare back financial assistance to unions by 33 per cent, even as unemployment continues to shoot higher.

Peripheral bond demand is also relatively unchanged so far today, after yields shot up for Italy and Spain yesterday. Those yields have fallen slightly early in the trading day. 

U.S. futures are also up slightly.

Today’s rally could have been influenced by an overnight rally in the Shanghai Composite.That closed up 1.74 per cent, despite losses in the Nikkei and Hang Seng.

UPDATE: Scratch that optimism. European markets just fell across the board, moving into negative territory. Bond yields in Italy and Spain have begun to climb.

This development appeared to follow a French bond auction. According to Bloomberg’s Linda Yueh, the country sold €8.439 billion in bonds—near the top end of its target range. Yields on 10-year bonds rose from 2.91 per cent in March to 2.98 per cent today. Yields on five-year issues also rose, but those on 15- and 30-year bonds fell.

Still to come at 7 AM EST is an important decision from the Bank of England, which will decide whether or not to continue quantitative easing as its current asset purchase program winds down.

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