European stocks opened lower on Thursday. The STOXX 600 index fell 0.3%, sharp sell-offs in technology stocks and a 11% drop in French Legrand weakened investor confidence. Commerzbank shares also increased pressure on the banking sector.
Following strong economic data in the US, the dollar traded near a multi-month high as investors turned their attention to the Bank of England (BoE) interest rate decision to be announced at 12:00. The pound recovered from its lowest level in 7 months seen overnight, rising 0.3% to $1.3080. Markets are currently pricing in a 40% probability of a rate cut.
Allspring portfolio manager Rushabh Amin stated that the BoE is in the “most complex position among G7 countries,” and predicted that the bank will not cut interest rates before the November budget.
In the bond market, British bond yields remained stable at 4.47%, while German bonds slightly retreated from a four-week high. US Treasury bonds held onto their gains following strong services sector and employment data.
Asian markets recovered, with the Japan Nikkei rising 1.4%, the Hong Kong Hang Seng rising 2.1%, and the South Korea Kospi rising 0.8%. The Chinese stock market also regained the 4,000-point level, led by technology and semiconductor stocks.
Oil prices rose 0.6% to $63.95 per barrel, while gold increased 0.7% to over $4,000.
According to experts, the probability of a Fed interest rate cut in December continues to decrease, and a period of high volatility in the markets may continue.
