European equity markets closed in mixed territory, with Germany’s DAX (ETR: DAX) finishing as the session’s weakest performer while the UK’s FTSE 100 posted modest gains.
France’s CAC 40 declined 0.79%, the German DAX fell 1.09%, Spain’s Ibex dropped 0.34%, Italy’s FTSE MIB edged up 0.10%, and the UK’s FTSE 100 outperformed with a gain of 0.29%.
Sentiment across the region was weighed down by rising oil prices, climbing long-term bond yields, and persistent geopolitical tensions centered on Iran.
WTI crude oil surged $2.14, or 2.56%, to $85.59, adding to inflation concerns that are already complicating the outlook for both growth and monetary policy.
European 10-year government bond yields moved broadly higher, with Italy’s yield rising the most, climbing 6.1 basis points to 4.169%, while Germany’s 10-year yield rose 3.5 basis points to 3.327%.
The UK’s 10-year gilt yield climbed 3.7 basis points to 5.078%, reflecting the broader upward pressure on sovereign borrowing costs across the continent.
Speaking at the G20 summit, U.S. Treasury Secretary Scott Bessent said Iran is taking American sanctions seriously and is “lashing out kinetically” because it is losing economically, adding that the U.S. will continue to exert pressure but that Iran’s economy does not need to collapse and simply needs to “come to its senses.”
Bessent also addressed the domestic U.S. economy, stating that real wages are growing and that the only way for the country to escape its debt burden is to grow its way out.
That growth-focused strategy carries risks, particularly if elevated oil prices and sticky inflation erode the conditions needed to sustain the expansion the administration is banking on.
In the U.S. bond market, the yield curve continued to steepen, with the 30-year Treasury yield rising 5.4 basis points to 5.2624% and the 10-year yield climbing 3.8 basis points to 4.7600%, while the 2-year yield slipped modestly by 0.8 basis points to 4.3416%.
U.S. equity markets also came under pressure, with the Dow Jones Industrial Average falling 343.01 points, or 0.64%, to close at 53,222.33, while the S&P 500 dropped 36.84 points, or 0.48%, to 7,674.91.
The NASDAQ Composite declined 110.95 points, or 0.42%, to 26,291.47, and the Russell 2000 fell 24.06 points, or 0.81%, to 2,948.31, with smaller-cap stocks bearing a heavier share of the selling.
Gold fell $25.26, or 0.57%, to $4,428.41, silver slipped $0.18 to $66.15, and Bitcoin was largely flat near $78,600 as investors assessed the broader risk landscape.
The continued climb in long-term yields, combined with Fed Chair Kevin Warsh’s hawkish tone from Friday, is adding meaningful headwinds for equity markets navigating an already uncertain macro environment.
