The DAX retreats on rising bond yields and uncertainties in China
The German stock market broke key support at around 14,000 points when European markets opened on Tuesday. The indices are falling in the wake of Wall Street as bond yields continue to rise and the health situation in China is worrying.
The US 10-year yield climbed again, 8 basis points on Monday, hitting an over-3-year high of 2.80%. Growth stocks naturally underperformed, especially the more expensive ones. The Nasdaq 100 fell 2.35%, compared to just 1% for the Dow Jones Industrial.
The DAX fell 1.0% on Tuesday in the face of rising bond yields and economic uncertainties as the health situation in China further deteriorates the global supply chain. More than 300 container ships are waiting to be loaded or unloaded at Chinese ports, three times more than normal.
The market should remain under pressure while waiting for the ECB on Thursday. The Central Bank Committee is unlikely to change monetary policy, but should tighten its tone in view of more persistent than expected inflation. It is possible that officials will announce that a hike in key rates at the next meetings is on the table, which would probably increase the pressure on the equity markets.