the pancontinental stoxx europe 600 fell 11 led by losses among tech stocks some investors are recalibrating portfolios to prepare for the gradual end of the ultrasupportive monetary policies employed to see the economy through the worst of the coronavirusdriven downturn rising yields make bonds more attractive than equities especially highlyvalued tech stocks for which investors count on profit growth far into the future people are realising or at least remembering that central banks are going to have to start raising rates said altaf kassam head of investment strategy for state street global advisors in europe the patient has become used to being given all these drugs but soon those drugs are going to have to be reduced while stock traders were already mulling the prospect of a less accommodative environment sparked by rising costs surging energy prices are increasing concerns particularly with the energy crisis expected to worsen activtrades said stocks with exacerbated valuations like the tech sector are the most vulnerable in this context of rising uncertainty activtrades analyst pierre veyret said this riskoff situation can also be found in other assets with bond yields reaching new highs in both europe and the us the social democrats party was the narrow winner of the german election but the christian democratic unionchristian social union will also attempt to form a coalition and both will need the green party and the free democratsfdpto form a majority government oxford economics said we continue to see only limited forecast implications either way oxford economics chief german economist oliver rakau said the strong showing of the green party implies an accelerated green transformation but the fdps support for the debt brake suggests the impact on investment may be limited therefore oxford economics sees limited room for a significant loosening of the fiscal stance and no real appetite for a fundamental overhaul of european unions fiscal rules the impact from the fuel shortages to the uk economy is likely to be modest and shortlived pantheon macroeconomics said panicbuying of fuel in the uk is likely to fade soon and there is no signs of shortages fears spreading to food or other goods it said demand should revert to nearnormal levels by the end of this week pantheon said however there may be some economic impact as the surge in spending on petrol will have left households with less money to spend in other categories people may take fewer trips in order to preserve fuel shortages could damage consumer confidence and businesses might pass higher costs to consumers it said us government bond yields hit their highest level in three months and stock futures sagged as investors rotated out of interestrate sensitive technology stocks investors have been shunning government bonds since last weeks federal open market committee meeting as traders brought forward expectations for the first rate hike into late 2022 markets are also giving roughly 50 odds the european central bank will join the fed with a rate hike next year fed chair jerome powell is speaking on tuesday in front of the senate banking committee with treasury secretary janet yellen on the governments response to the coronavirus pandemic and is due on wednesday to speak at an ecb event powell would have to make some very strong arguments now to stop the current rise in yields said mark grant chief global strategist at b riley financial the 10 year treasury has now broken through its technical resistance and things could get problematical grant says investors should be selling bonds and using yieldpaying exchangetraded and closedend funds as income substitutes the dollar rose along with us treasury yields before fed chair jerome powells testimony to the senate banking committee later powell will say that the fed would raise interest rates if sustained higher inflation became a serious concern according to prereleased comments of his testimony the dxy dollar index rises to a fiveandahalfweek high of 935940 and eurusd falls to a fiveandahalfweek low of 11674 according to factset the dxy dollar index is still having difficulty climbing above the august high of 9373 and this is reflected in the eurusds ability to hold the line close to 117 unicredit analysts said the ecbs loose policy stance means the euro looks vulnerable to rising shortterm us treasury yields ing said ahead of the ecbs sintra forum later eurusd could fall below the key 11665 support level today ing analysts said ecb president christine lagarde will deliver sintras opening speech at 1200 gmt and the focus will be on ecbs view on inflationlikely still viewed as transitory and any hints over how the end of the pandemic emergency purchase programme scheme will be handled next march the analysts said the shortage of truck drivers and lack of fuel at petrol stations in the uk are becoming increasingly serious but are so far having little impact on the pound commerzbank said this is mainly due to the bank of england which is increasingly emphasizing its willingness to fight higher inflation risks which supply bottlenecks also entail with interest rate hikes if necessary commerzbank currency analyst esther reichelt saidboe governor andrew bailey on monday said that interest rates could be raised before christmas if needed to stem inflation expectations of tighter monetary policy and concerns about inflation pressures pushed bond yields higher the yield on the benchmark 10year treasury note rose for a sixth consecutive day tuesday to 1533 from 1482 monday until a government coalition is formed german bunds are more vulnerable to rising yields in the us than the german election said steen jakobsen chief investment officer of saxo bank jakobsen said that 10year bund yields are trading in a fast area which may take them quickly to 015 for now he sees less of an impact from this past sundays election on bund yields although the german election may represent a big change for the european sovereign space it will not set direction until a governing coalition is formed he said euro rates are currently being driven upwards by a global trend said ings rates strategists we think eur rates had nothing more than a passengers role in the rise of global rates of late said ings rates strategist team they add that european central bank speakers have made it abundantly clear that the recent and upcoming rise in inflation doesnt warrant a policy response the key event for euro bond investors is the ecbs virtual conference starting tuesday oil prices rose with both benchmarks hitting their highest prices in three years and brent grazing the 80abarrel mark both benchmarks have gained 11 or more over the past month with growing signals that demand is running ahead of supply and that global inventories are falling adding to moves is a spate of bets on higher prices from analysts and traders goldman sachs raised its yearend brent price to 90 monday while trafigura and other trading houses have spoken out about their bullish predictions the recent surge in natural gas prices has also helped bets that crude will benefit from excess demand natural gas prices set fresh highs tuesday us henry hub natural gas prices jumped 58 to 606 per million british thermal units their highest since 2014 metal prices edged lower ahead of testimony from federal reserve chair jerome powell and treasury secretary janet yellen to us lawmakers threemonth copper prices on the lme dropped 04 to 931150 a metric ton while comex gold futures fell 06 to 174220 a troy ounce powell is expected to tell lawmakers that a surge in inflation because of bottlenecks in supply chains has been larger and lasted longer than expected but should abate in time powell is also likely to be quizzed on the feds bond buying program after he said last week that the central bank could begin reducing asset purchases as soon as november sanofi ends a covid19 vaccine effort saying market is already well served sanofi sa wont proceed with the development of one of its experimental covid19 vaccines saying it didnt make sense to go forward in an alreadycrowded market the decision comes despite promising early results for the shot the french healthcare giant said tuesday that the vaccinea socalled mrna shot that uses the same technology as shots developed by pfizer inc and moderna incproduced neutralizing antibodies against the virus in earlystage clinical trials but it said it had decided not to proceed with larger studies called phase 3 trials which would be required to win regulatory approval german consumer confidence is expected to increase in october consumer sentiment in germany is expected to strengthen in october reaching its highest level for the last year and a half according to data from marketresearch group gfk released on tuesday gfks forwardlooking consumer sentiment index forecasts confidence among households rising to 03 point in october from minus 11 points in september economists polled by the wall street journal anticipate a drop expecting sentiment to decline to minus 19 points maersk to sell refrigeration businesses to chinas cimc for 108 billion denmarks ap moellermaersk as plans to sell its refrigerated containers manufacturing and refrigeration businesses to china international marine containers group co for 108 billion