Global Markets Reel Amid Inflation Concerns and High Bond Yields

Global stocks suffered losses with European shares opening weak as U.S. inflation concerns resurfaced, driving up bond yields and boosting the dollar. As the Federal Reserve indicated measured rate cuts, markets adjusted expectations. Meanwhile, European Central Bank is expected to implement deep rate cuts amidst rising euro zone inflation.

Global stocks took a hit as European shares faced a weak start on Wednesday, fueled by renewed U.S. inflation concerns that pushed bond yields higher and bolstered the dollar. This movement left the yen, yuan, and euro near multi-month lows.

Asian and Wall Street markets suffered overnight, influencing Europe to open lower. As data revealed the U.S. economy and labor market stability, it strengthened anticipations that the Federal Reserve will approach rate cuts cautiously this year. Eurostoxx 50 futures dropped by 0.3%, and German DAX futures fell 0.23%, with European tech stocks likely to feel the pressure from rising bond yields.

Focus in 2025 has shifted to U.S. rate expectations amid policy divergence and tariff threats. The Fed projected limited rate cuts in December while investors priced in easing this year. Meanwhile, deeper rate cuts are anticipated from the European Central Bank, despite an acceleration in euro zone inflation. This has kept the euro close to a two-year low against the dollar.

(With inputs from agencies.)