European stocks fell, long-term yields declined and the euro weakened. Dollar-yen moved into the upper ¥158 range, while euro-dollar fell below 1.12, putting European markets broadly into risk-off mode.
European markets on the afternoon of the 1st ended broadly lower, with the FTSE 100 down 177.73 points and the DAX down 259.84 points. Higher oil prices and rising U.S. long-term yields weakened investor sentiment, sending financial and auto stocks lower.
In currency markets, euro-dollar was soft, with the euro continuing to weaken against the dollar. Euro-yen remained near its lows, as the euro weakened and the yen strengthened at the same time. Dollar-yen rose to around ¥158.45 at one point before turning back toward ¥158 as New York investors entered the market.
In European bond markets, government bonds were bought as long-term yields rose, moving in tandem with the decline in European stocks, and demand for German government bonds as a relatively safe asset increased. UK gilt yields reached 5.398% as movements in U.S. long-term yields had a direct impact.
Among the main economic indicators, the revised eurozone manufacturing PMI came in at 52.9, almost unchanged from the previous reading. The indicators for the UK, Switzerland, France and Germany also showed only minor changes.