LONDON – European markets retreated slightly on Friday, but are still underway for a positive week, with an increase in Treasury yields resurging some caution from investors.
The pan-European Stoxx 600 fell 0.2% at the start of trading, with technology stocks falling 1.2% to initial losses, while banks rose 0.6%.
European equities received a reasonably strong transfer from Asia-Pacific, where markets advanced broadly during Friday’s trading after the S&P 500 hit record highs in the US session on Thursday.
The momentum on Wall Street came after US President Joe Biden sanctioned a $ 1.9 trillion coronavirus relief package, which will send direct payments of up to $ 1,400 to most Americans. Futures contracts linked to the main US indices were mixed at the beginning of the pre-market negotiations on Friday.
However, the yield on the 10-year US Treasury benchmark note rose again Friday morning after the stimulus was approved, reaching 1.6% briefly.
The European Central Bank on Thursday pledged to increase its bond buying efforts “significantly” in the second quarter, after borrowing costs rose across the continent, with European bond yields following higher US Treasury yields last month.
Investors feared that rising bond yields could hurt Europe’s economic recovery by raising borrowing costs for countries that are already struggling with the coronavirus crisis.
The European Union on Thursday approved the single-dose vaccine Covid-19 from Johnson & Johnson, while the bloc intends to begin its slow implementation of vaccination.
Meanwhile, Canada has insisted that inoculation of AstraZeneca and the University of Oxford is safe after its use was suspended in Denmark, Norway and Iceland because of reports of blood clotting in some people who received the injection.
In terms of data, the UK economy shrank 2.9% in January compared to the previous month, official data showed Friday, a less severe contraction than expected, as the country again entered the national blockade.
“Although the national blockade has paralyzed a number of sectors, the impact on consumer sectors has not been as bad as it could have been,” said James Smith, ING’s developed market economist.
“But what really stands out are health spending, where the intensification of the government’s testing and tracking scheme and vaccine programs added 0.9% to GDP figures only.”
British luxury fashion brand Burberry saw its shares rise by more than 7% to the top of the Stoxx 600 at the start of negotiations, after updating its orientation due to a strong rebound in sales.
At the bottom of the index, developer Berkeley Group fell 4.8% after projecting stagnant profits in 2021.
Credit Suisse fell 4% while facing questions from regulators about supply chain financing funds linked to the collapse of Greenhill Capital, according to Reuters.
– CNBC’s Saheli Roy Choudhury contributed to this report.
Subscribe for CNBC PRO for exclusive insights and analysis, and live weekday scheduling around the world.