LONDON — European stocks are expected to open lower Wednesday as global markets take a downturn after a sell-off on Wall Street on Tuesday, prompted by rising bond yields and worse-than-expected earnings.
The U.K.’s FTSE index is seen opening 31 points lower at 7,533, Germany’s DAX 73 points lower at 15,700, France’s CAC 40 down 34 points at 7,100 and Italy’s FTSE MIB 158 points lower at 27,325, according to data from IG.
The lower open in Europe comes after a sell-off on Wall Street triggered by surging bond yields sent global markets lower in the previous trading session.
U.S. bond yields continued their year-to-date climb on Tuesday with the 10-year Treasury topping 1.87%, its highest level in 2 years. The 10-year yield started the year around 1.5%. Meanwhile, the 2-year rate — which reflects short-term interest rate expectations — topped 1% for the first time in two years. Bond yields move inversely to prices.
Investors remain jittery over the U.S. Federal Reserve’s schedule for hiking interest rates and tightening its ultra-loose pandemic-era monetary policy.
Major U.S. averages also fell sharply Tuesday after Goldman Sachs missed analysts’ expectations for its fourth-quarter earnings. Big bank earnings continue on Wednesday with reports from Bank of America and Morgan Stanley slated before U.S. trading starts.
U.S. stock futures were steady in overnight trading while Asia-Pacific markets fell on Wednesday following the sell-off on Wall Street.
Earnings in Europe come from Richemont, WH Smith, JD Wetherspoon and Burberry on Wednesday while data releases include U.K. inflation and producer price data for December and euro zone construction output for November.
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— CNBC’s Maggie Fitzgerald contributed to this market report.