Financial Markets Daily Report Highlights European Fiscal Concerns and U.S. Equity Gains

Risk sentiment in Europe weakened due to persistent investor concerns over France's fiscal outlook, impacting equities, the euro, and sovereign bonds. In contrast, U.S. equities advanced, driven by AI-related and semiconductor stocks. European sovereign yields rose, with France's 10Y yield increasing to 4.94% and the OAT-Bund spread widening to 148bp. The euro depreciated against the dollar and sterling. Markets anticipate the ECB to hold rates in October but assign an 84% probability to a December hike. U.S. Treasury yields rose, with markets pricing in the Fed to keep rates on hold in October. Oil prices marginally slipped following a Trump executive order waiving some Russian export sanctions and renewed attacks on Saudi energy infrastructure by an Iran-backed group.