European stocks fall, bond yields advance

Bloomberg

Stocks in Europe declined and bond yields climbed as markets reopened after a holiday amid hawkish comments by Federal Reserve officials and Russia’s renewed campaign in eastern Ukraine.
Healthcare stocks led the decline in the Stoxx Europe 600 index. Dutch automaker Stellantis NV slumped after halting output at factory near Moscow that makes vans, following a long list of manufacturers ceasing output at plants in Russia due to the war in Ukraine.
Energy stocks were led higher by TotalEnergies SE on a positive first-quarter report, while the raw-materials sector was in the green as gains for copper and other industrial metals pushed Bloomberg’s Commodities Spot Index to a record.
US futures rise after stocks ended little changed. Treasury yields ticked higher after the long end declined. St. Louis Fed President James Bullard said that rate increases of 75 basis points — while not the base case — shouldn’t be ruled out as the central bank needs to move quickly to combat inflation. European bonds fall, with German and UK 10-year yields at the highest since 2015.
Disruptions to supply chains from China’s lockdowns and to commodity flows from the war are keeping pressures on central banks to rein in runaway prices at a time when global growth is tipped to slow. The World Bank cut its forecast for global economic expansion this year on Russia’s invasion.
“The Bullard comments really encapsulate the quandary that many of the world’s central banks have found themselves in,” said Jeffrey Halley, a senior markets analyst at Oanda. “Luckily, they have plenty of excuses in the shape of the pandemic and the Ukraine war. Central banks can now play catchup, hike aggressively and run the risk of recessions. Getting the pain over and done may be the least worst option.”
Equities gained in Japan as the yen extended its longest losing streak in at least half a century. Hong Kong technology names declined on ongoing concerns over the regulation. China dropped as investors
assessed measures to tackle economic headwinds from Covid-led lockdowns.
In China, markets are also awaiting the release of banks’ benchmark lending rates on Wednesday after the People’s Bank of China reduced the reserve requirement ratio for most banks but refrained from cutting interest rates.
The latest policy measures “have really highlighted easing is required,” Gareth Nicholson, Nomura chief investment officer and head of discretionary portfolio management, said on Bloomberg Television. “The markets don’t believe enough has been done and they’re going to have to step it up.”
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