European stocks edge lower

European stocks edged lower on Wednesday, following the previous day’s declines on Wall Street, as markets showed little reaction to robust German economic data.

The region-wide Stoxx 600 fell 0.2 per cent, while Germany’s Dax lost 0.3 per cent and France’s Cac 40 slipped 0.2 per cent. London’s FTSE 100 rose 0.3 per cent.

The moves came after German factory orders increased 4.8 per cent in February month on month, beating expectations of 0.5 per cent in the latest positive signal for Europe’s largest economy.

US stocks had fallen on Tuesday following employment data that appeared to show that the labour market in the world’s biggest economy was cooling.

“The release added to the signs that the Fed’s tightening cycle was increasingly having an effect, and the historic levels of tightness in the labour market were finally beginning to ease,” said analysts at Deutsche Bank.

Analysts are looking to the release of non-farm payrolls and the unemployment rate on Friday to provide further clarity. Investors now see a roughly even chance that the US Federal Reserve will raise interest rates by a further quarter percentage point at its next meeting in May or satay on hold.

Futures contracts linked to the blue-chip S&P 500 and the tech-heavy Nasdaq indicated that both indices are expected to open 0.2 per cent lower on Wednesday.

Investors remain on edge over the fallout from the recent banking crisis. On Tuesday, the KBW bank index, which tracks 22 US banks, lost 2 per cent after JPMorgan chief executive Jamie Dimon warned that the crisis was “not yet over” and its effects would be felt for “years to come”. The Stoxx 600 Banks index lost 0.9 per cent.

“So far the contagion has been contained but I think we lack perspective on the broader ramifications of the end of easy money and higher interest rates,” said Emmanuel Cau, head of European equity strategy at Barclays. “There may be pockets of instability.”

In Asia, the Hang Seng index closed down 0.7 per cent, while China’s CSI 300 gained 0.3 per cent.

Treasury prices fell, with the yield on 2-year Treasuries rising 0.04 percentage points to 3.87 per cent, and the yield on 10-year bonds gaining 0.02 percentage points to 3.35 per cent. On Tuesday, the yield on 10-year notes fell to 3.34, the lowest level since September.

The dollar index, which measures the greenback against a basket of six peer currencies, rose 0.1 per cent.

Oil prices continued to climb with Brent crude up 0.2 per cent to $85.12 a barrel and WTI up 0.2 per cent to $80.82 a barrel. Gold rose 0.2 per cent to 2,024.29, its highest level since March 2022.