European markets retreated on Thursday morning, while a rise in bond yields saw nervousness return to global equities.
The pan-European Stoxx 600 fell by 0.7% in mid-morning trade, with core resources falling by 3.9% as most sectors went red. Utilities decreased the downward trend of 0.6%.
European equities received poor delivery from Asia-Pacific, where Japan’s Nikkei 225 and Hong Kong’s Hang Seng index fell more than 2% to lead to losses as the 10-year US Treasury yield rose again. Yield stabilized slightly on Thursday morning and was last seen at 1.4671%.
US futures also indicate additional losses at Thursday’s market opening, accelerating Wednesday’s declines for major indices as yields rose. Last week, the 10-year yield rose to a maximum of 1.6% in a move that some described as “rapid” growth, but which raised concerns about stock valuations and rising inflation.
Technical action was the major victim of the withdrawal, with investors pivoting on shares seen as having the potential to benefit from an economic recovery, following the launch of the Covid-19 vaccine and progress towards a US fiscal stimulus package.
Investors in the country will watch a speech by Federal Reserve Chairman Jerome Powell later on Thursday on indications of growth and inflation.
In terms of data, PMI (Procurement Managers’ Index) readings for IHS Markit Construction for February will take place on Thursday morning in the UK, Germany, France, Italy and the wider eurozone.
It is another busy day for earnings in Europe, which promises to be a key factor in individual stock price action. Thales, Lufthansa, Merck, ProSiebenSat.1 and Aviva were among those who reported before the bell.
Lufthansa posted a lower-than-expected net loss in the fourth quarter, but recorded a year-on-year loss of 6.7 billion euros ($ 8.1 billion) in 2020. The airline has warned it will fight to take advantage of flights before the end of 2021 as the pandemic continues to affect the demand for air travel.
German food processing company GEA Group rose 3.7% to lead the Stoxx 600 by mid-morning, after increasing its profitability in 2020 and projecting revenue and revenue growth in 2021.
Aviva exceeded the company’s expectations of a fixed operating profit in 2020 of £ 3.2 billion ($ 4.5 billion) and sold off the rest of its business in Italy to focus on core markets, sending shares the British insurer 1.8% higher by mid-morning.
At the bottom of the European blue chip index, Anglo-Australian mining titanium Rio Tinto fell more than 6% after President Simon Thompson announced it would give up the company’s destruction of a 46,000-year-old indigenous site in Australia of the West.
Shares of ProSiebenSat.1 fell 4.8% after the company projected a single-digit revenue increase in 2021, despite a strong fourth quarter.
– CNBC’s Pippa Stevens contributed to this report.
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