European markets retreated on Thursday morning, with an increase in bond yields and nervousness returning to global equities.
The pan-European Stoxx 600 fell 0.7% in mid-morning trading, with basic resources falling 3.9% as most sectors fell to the red. Concessionaires resisted the downward trend of 0.6%.
European equities received a weak transfer from Asia-Pacific, where Japan’s Nikkei 225 index and Hong Kong’s Hang Seng index fell more than 2%, leading the losses, with the 10-year US Treasury yield rising again. Yield stabilized somewhat on Thursday morning, however, and was last seen at 1.4671%.
US stock futures are also pointing to further losses at Thursday’s market opening, accelerating Wednesday’s declines for major indices as yields soared. Last week, the 10-year yield rose to a 1.6% high in a move that some have described as a “sudden” peak, but which has raised fears about the appreciation of stocks and rising inflation.
Technology stocks were the main victim of the withdrawal, with investors opting for stocks seen as having the potential to benefit from an economic recovery, in the wake of Covid-19 vaccination launches and progress towards a fiscal stimulus package from the USA.
Investors in the United States will be eyeing a speech by Federal Reserve Chairman Jerome Powell on Thursday for indications about the direction of growth and inflation.
With respect to the data, February IHS Markit Construction PMI (Purchasing Managers’ Index) readings are expected to be taken Thursday morning in the UK, Germany, France, Italy and the eurozone in general.
It is yet another busy day for profits in Europe, which promises to be one of the main drivers of individual share price action. Thales, Lufthansa, Merck, ProSiebenSat.1 and Aviva were among those who reported before the bell.
Lufthansa posted a less than expected net loss in the fourth quarter, but had a year-on-year loss of 6.7 billion euros ($ 8.1 billion) in 2020. The airline has warned that it will be difficult to profit from flights before the end of 2021, as the pandemic continues to hammer the demand for air travel.
German food processing company GEA Group rose 3.7% to head the Stoxx 600 mid-morning, after increasing its profitability in 2020 and projecting revenue and profit growth in 2021.
Aviva exceeded the company’s expectations to post stable operating profit in 2020 of £ 3.2 billion ($ 4.5 billion) and sold its remaining businesses in Italy to focus on the main markets, sending the shares of the British insurer 1.8 % higher in the middle of the morning.
At the bottom of the European blue chip index, Anglo-Australian mining titan Rio Tinto fell more than 6% after President Simon Thompson announced that he would renounce the destruction of a 46,000-year-old indigenous area in Western Australia.
ProSiebenSat.1 shares fell 4.8% after the company projected single-digit revenue growth in 2021, despite a strong fourth quarter.
– Pippa Stevens from CNBC contributed to this report.
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