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ECB Holds Interest Rates Steady, Bond Yields Remain Stable

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“The ECB rate decision holds the key to bond yields, as market participants eagerly anticipate whether the central bank will maintain its accommodative stance or signal a shift towards a tighter monetary policy, setting the stage for potential volatility in the bond market.”

European stock markets opened sharply lower Thursday as attention remains on third-quarter earnings and government bond yields. The regional Stoxx 600 was down 1.1% at 8:14 a.m. London time, with nearly all sectors in the red. Auto stocks plunged 3.45% as results disappointed, while travel stocks traded 1.7% lower.

Standard Chartered fell more than 12% in early trade before slightly trimming losses to 10%. The British bank posted a huge profit miss as it revealed a $1 billion hit from exposure to the Chinese banking and real estate sectors.

Results are out from a slew of companies including Standard Chartered, BNP Paribas, TotalEnergies, Volvo Cars, Novozymes, Volkswagen, Carrefour, Saab, and Wacker Chemie.

Investors are also assessing the activity stateside in a busy week for tech earnings, with Facebook owner Meta reporting better-than-expected results after the bell. U.S. stock futures were lower overnight after a broad selloff Wednesday, fueled by disappointing results from Alphabet.

Meanwhile, monetary policy decisions are due from the European Central Bank — for which markets have priced in a more than 98% likelihood of a hold in interest rates — and the central bank of Turkey, from which economists polled by Reuters anticipate a 500 basis point hike to 35%.

The global rise in bond yields is also hanging over markets. Recent volatility may influence the ECB’s decisions on quantitative tightening, while the creep higher in the 10-year U.S. Treasury has caused concerns over the outlook for stocks.

Asia-Pacific markets saw a broad selloff Thursday as earnings disappointed. The benchmark 10-year Japanese government bond yield hit a fresh 10-year high ahead of a central bank meeting next week, according to Reuters data.

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