LONDON – European markets declined slightly on Friday, but are still on track for a positive week as a rise in government bond yields re-emerged some caution among investors.
The pan-European Stoxx 600 was down 0.2% in early trading, with tech stocks shedding 1.2% to incur losses, while banks were up 0.6%.
European equities got a fairly strong transfer from Asia-Pacific, where markets broadly made gains during Friday’s trading after the S&P 500 hit record highs during US trading hours on Thursday.
The momentum on Wall Street came after US President Joe Biden signed law with a $ 1.9 trillion coronavirus relief package that will send instant payments of up to $ 1,400 to most Americans. Futures pegged to major US indices were mixed in early premarket trading on Friday.
However, the yield on the US 10-year Treasury bond in the benchmark rose again on Friday morning in the wake of the stimulus passage, briefly reaching 1.6%.
The European Central Bank vowed on Thursday to “significantly” step up its bond-buying efforts in the second quarter, after borrowing costs rose across the continent, with European bond yields higher last month after US Treasury yields .
Investors worried that rising bond yields could derail Europe’s economic recovery, increasing borrowing costs for countries already grappling with the coronavirus crisis.
The European Union approved Johnson & Johnson’s single-shot Covid-19 vaccine on Thursday, as the bloc wants to accelerate the slow rollout of vaccinations.
Meanwhile, Canada has insisted that AstraZeneca and the University of Oxford vaccinations are safe after its use was suspended in Denmark, Norway and Iceland due to reports of blood clotting in some people who received the injection.
In terms of data, the UK economy contracted 2.9% in January from the previous month. Official figures showed a less severe contraction than expected on Friday as the country reentered the nationwide lockdown.
“While the national lockdown hit a range of industries, the blow to consumer industries was not as bad as they could have been,” said James Smith, developed markets economist at ING.
“But what really stands out is the health spending, with the ramp-up of the testing and tracking program and the government vaccine programs alone adding 0.9% to the GDP figures.”
British luxury fashion brand Burberry saw its shares rise by more than 7% to the top of the Stoxx 600 early in trading, after improving its outlook amid a strong rebound in sales.
At the lower end of the index, real estate developer Berkeley Group fell 4.8% after predicting flatlining gains in 2021.
Credit Suisse was down 4% as it faces questions from regulators about supply chain funding funds related to the collapsed Greenhill Capital, Reuters said.
– CNBC’s Saheli Roy Choudhury contributed to this report.
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