European stock markets opened lower, amid rising bond yields and inflation exceeding 3%, with markets increasing bets on an ECB interest rate hike.

European stock markets opened lower after bond yields surged to multi-year highs, while eurozone inflation accelerated to over 3% in August, fueling expectations that the ECB might raise interest rates by 0.25% next week.

On September 2, 2026, at 3:30 PM, European stock markets opened lower today (September 2) amid pressure from rising government bond yields. Eurozone inflation data for August accelerated above 3% due to higher energy costs, further reinforcing expectations that the European Central Bank (ECB) may raise interest rates at its meeting next week.

The STOXX 600 index opened at 646.72 points, down 0.74 points or 0.11%. France's CAC 40 index opened at 8,292.95 points, down 8.90 points or 0.11%. Germany's DAX index opened at 25,886.67 points, down 83.44 points or 0.32%.

The main pressure on equity markets came from the bond market, after eurozone bond yields rose to their highest levels in several years, amidst sell-offs in government bonds across many markets worldwide. Investors are once again concerned that inflationary pressures may force central banks to maintain tight monetary policies for longer than previously anticipated, or even require further interest rate hikes.

These concerns intensified after eurozone inflation data for August edged above 3%, with energy costs being a key factor. This led markets to increase their expectations of an ECB interest rate hike at next week's meeting, with data from LSEG reflecting investor expectations of a 0.25 percentage point increase.

Rising bond yields have also made bonds more attractive compared to stocks, especially for investors seeking diversification after a period of strong returns in the stock market, while bonds can offer higher returns without the same level of stock price volatility.

Meanwhile, higher bond yields are putting direct pressure on interest rate-sensitive stocks, particularly technology, real estate, and utilities, as increased financing costs and higher discount rates reduce the present value of future cash flows, leading to a lower price investors are willing to pay for those stocks.

Technology stocks are particularly sensitive because the value of many companies depends on future earnings forecasts. Meanwhile, the real estate sector faces higher borrowing and refinancing costs. Utility and high-dividend stocks may become less attractive as government bonds offer higher yields and become a more competitive investment alternative.

The short-term direction of European stock markets therefore still largely depends on bond yield movements and inflation trends. Investors will be watching for signals from ECB officials and additional economic data to assess whether the central bank will proceed with interest rate hikes next week as the market anticipates, as well as the direction of monetary policy for the remainder of the year.

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