European stocks open lower after hot U.S. inflation raises rate hike bets

European stocks open lower after hot U.S. inflation raises rate hike bets

European stock indexes

DAX 40 is trading up 0.18% at 15420.80

European stock indexes fell on Friday and the U.S. 10-year yield held close to 2% after red-hot U.S. inflation data that prompted investors to expect tighter monetary policy from the Federal Reserve.

U.S. consumer prices showed the biggest annual increase in 40 years, data released late on Thursday showed.

The news fuelled speculation that the Fed will increase rates by 50 basis points in March, rather than 25. This hurt global stock markets as expectations of monetary policy tightening generally reduce investors’ appetite for risk-sensitive assets.

Wall Street stocks fell after the data and the weakness continued through the Asian session. The MSCI world equity index, which tracks shares in 50 countries, was down 0.4% on the day at 0850 GMT.

Europe’s STOXX 600 was down 1%, with tech stocks leading the sell-off. But it was still on track for its biggest weekly gain since late December.

“Real inflation is not under control,” said Matteo Cominetta, senior economist at Barings Investment Institute. “It’s a story of overheating, plain and simple.”

The U.S. 10-year Treasury yield hit 2% for the first time since August 2019 after the data and remained above this level during the Asian session.

On technical fronts, DAX 40 RSI stood at 52.00, and currently, it is trading above all MA. So, the BUY position can be taken with the following target and stop-loss:

TRADE SIGNAL – : DAX 40 – BUY: 15400.00, TARGET: 15491.40, STOP LOSS : 15297.10

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