European shares rebound at open as oil eases, bond yields remain a threat

• Eurostoxx +0.8%
• Germany DAX +0.6%
• France CAC 40 +0.5%
• UK FTSE 100 +0.5%
• Spain IBEX +0.8%
• Italy FTSE MIB +1.0%

European equities are recovering at the start of trading, though caution is warranted over the early gains.

The move appears to be a relief rally following the prior day's selloff rather than the beginning of a clear risk-on shift. Crude oil prices are retreating somewhat, easing some immediate inflation concerns and giving stocks a bit more space. West Texas Intermediate crude was trading 1.3% lower on the day at $93.55.

A larger concern remains the bond market. The 10-year Treasury yield climbed toward 5.20% on the previous day, a level not seen since 2007, while the 30-year yield touched 5.50% for the first time since 2004. This creates an uncomfortable environment for equity valuations, especially if yields keep moving higher.

Overall, the market sentiment is better described as relief rather than outright bullishness.

US futures are also contributing to the early bounce. S&P 500 futures were up 0.1% and Nasdaq futures gained 0.4%, though tech sentiment is being influenced notably by Meta this week. The company's shares jumped another 4% overnight after the launch of its Muse AI, which remains under investor evaluation.

The larger macro picture continues to be the driving force. Lower oil prices and Meta's strong performance are helping keep market mood steadier for now. However, if bond yields do not stabilise, the risk that sparked the recent selloff remains in place.