Europe midday: Stoxx lower as bond jitters hit sentiment

(Sharecast News) - European markets were lower on Monday as investors fretted over the impact of a potential trade war between the US and China, along with concerns about rising elevated bond yields and the pace of interest rate cuts after an unexpected spike in American jobs growth.

The pan-European Stoxx 600 was down 0.84% to 507.24 points. All major markets were lower.

In economic news, China said its trade surplus reached almost $1trln last year as its exports continued to dominate with a potential trade war looming days away from the arrival of Donald Trump as president.

The General Administration of Customs said $3.58trln of exports left the country last year, with imports coming in at $2.59trln. The $990bn surplus broke the previous record of $838bn in 2022.

Trump, who takes office next week, has threatened to impose tariffs on China and other countries, heightening an already aggressive trade stance against the world's second-largest economy.

The Stoxx fell almost 1% on Friday when official data showed US surged in December while the unemployment rate fell to 4.1%, with betting increasing on a slower pace of rate cuts this year.

Investors are also watching bond yields, still higher globally as markets continue to reprice the cost of government borrowing.

"Friday's jobs figures showed the US economy is more resilient than expected, quashing hopes for multiple interest rate cuts from the Federal Reserve this year," said Hargreaves Lansdown analyst Susannah Streeter.

"With the dollar strengthening against a basket of currencies it also runs the risk of higher inflation being exported, due to the higher cost of imports, adding to headaches for other central banks. UK government borrowing costs have crept up even higher, with the yield on 10-year gilts nudging 4.9%, a highly unwelcome hurdle, levels not seen since the Great Financial Crisis."

In equity news, Entain jumped after the UK gambling group said it expected core profit for 2024 to be at the top end of its forecast range.

Reporting by Frank Prenesti for Sharecast.com