Source: Sharecast
The pan-regional Stoxx 600 index was down 0.62% at 546.04. Germany's DAX managed to eke out a small gain of 0.02%.
“The week starts with a jump in US yields and a weaker dollar after Moody’s downgraded the US credit rating from the top Aaa to Aa1, citing concerns about the US’ rapidly rising debt toward the $37 trillion mark and a budget deficit reaching 7% — the highest in peacetime,” said Swissquote Bank analyst Ipek Ozkardeskaya.
“Moody’s decision is unsurprising, as S&P and Fitch had already downgraded the US below AAA. If Moody’s hadn’t followed suit, it risked undermining its own credibility.”
US government bonds were weaker, with the 30-year Treasury yield up to 5.026% from 4.89% on Friday night just before the downgrade. The 10-year was up 10 basis points to 4.548%.
Meanwhile, UK bond yields also jumped, with 10-year gilts is up by 10 basis points to 5.485% after the European Union and Britain reached a tentative agreement on defence and security, fisheries and youth mobility ahead of a EU-UK summit on Monday.
On the economics front, the European Commission cut its forecast for eurozone growth this year to 0.9%, down from 1.3% forecast last November. The wider EU is now forecast to grow by 1.1%, down from 1.5% forecast six months ago.
"This represents a considerable downgrade compared to the autumn 2024 Forecast, largely due to the impact of increased tariffs and the heightened uncertainty caused by the recent abrupt changes in US trade policy and the unpredictability of the tariffs’ final configuration," the commission said in its spring forecasts.
It added that headline inflation was expected to hit the 2% target by the middle of this year, earlier than expected, before dropping to 1.7% in 2026.
In equity news, shares in BNP Paribas rose after the French bank unveiled a €1.08bn share buyback plan.
Ryanair made gains after the Irish low-cost carrier reported strong demand across Europe and said it expected a recovery in fare prices.
Reporting by Frank Prenesti for Sharecast.com