LONDON – European markets retreated slightly on Friday, but are still on track for a positive week, as a rise in treasury yields reappears with some caution from investors.
The pan-European Stoxx 600 fell 0.2% in early trading, with technology stocks rising 1.2% to offset losses while banks climbed 0.6%.
European equities received a fairly strong handover from Asia-Pacific, where markets advanced far during Friday’s trading after the S&P 500 hit a record high in U.S. trading hours on Thursday.
The momentum on Wall Street came after US President Joe Biden signed a $ 1.9 billion coronavirus relief package, which will send direct payments of up to $ 1,400 to most Americans. Futures linked to major US indices were mixed in the early pre-sale on Friday.
However, yields on the standard U.S. Treasury note for ten years rose again Friday morning in the wake of the stimulus run, which briefly reached 1.6%.
The European Central Bank on Thursday promised to “significantly” increase its second-quarter bond buying efforts, after borrowing costs rose across the continent, with European bond yields surpassing U.S. yields over the past month treasury.
Investors were worried that rising bond yields could derail Europe’s economic recovery by raising borrowing costs for countries already struggling with the coronavirus crisis.
The European Union on Thursday approved Johnson & Johnson’s single-shot vaccine Covid-19 as the bloc wants to begin its slow vaccination.
Meanwhile, Canada has insisted the vaccination of AstraZeneca and the University of Oxford is safe after its use was suspended in Denmark, Norway and Iceland due to reports of blood clots in some people who received the shot.
According to the data, the British economy shrank by 2.9% in January compared to the previous month, official figures showed on Friday, a less severe contraction than expected as the country closed again nationwide.
“While the national exclusion closed a range of industries, the hit for consumer industries was not quite as severe as it could have been,” said James Smith, ING’s developed market economist.
“But what really stands out is health spending, where the increase in the government’s testing and detection scheme and vaccination programs has added only 0.9% to GDP figures.”
British luxury fashion brand Burberry has risen its shares in the early trading session by more than 7% to the top of the Stoxx 600, after improving its guidelines due to a strong recovery in sales.
At the bottom of the index, real estate developer Berkeley Group fell 4.8% after expecting a steady profit in 2021.
Credit Suisse has fallen by 4% as it gets questions about supply-side funding funds linked to the collapsed Greenhill Capital, according to Reuters.
– CNeli’s Saheli Roy Choudhury contributed to this report.
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