Euro zone government bond yields fell on news that German business activity slowed notably in June, while French business activity contracted this month for the first time in five months.
The MSCI All Country stock index was down 0.38% at 673.66 points, and off 1.6% for the week, though still up 11.5% for the year. “We are probably close to peak terminal interest rates for the Federal Reserve and Bank of England, but there is a feeling that central banks are prepared to risk a recession to try get core prices lower,” said Mike Hewson, chief markets strategist at CMC Markets.
Investors, however, should keep a cool head because economic growth was not falling off a cliff, disinflation was on its way, long-term bond yields were behaving well, and central banks are near the end of their rate tightening cycle, Thozet said.Oil prices fell for a second straight session and were headed for a weekly decline of more than 3% as a more hawkish tone from central banks cast a cloud over demand. A rising dollar also makes the commodity more expensive for some customers.