European markets retreated on Thursday morning as a rise in bond yields returns to global equities.
The pan-European Stoxx 600 plunged 0.7% mid-morning, with basic resources falling 3.9% as most sectors fell into the red. Utilities found the downward trend to climb 0.6%.
European equities received a weak handover from Asia-Pacific, where the Japanese Nikkei 225 and Hong Kong’s Hang Seng index fell more than 2% to lead losses as ten-year US Treasury yields rose again has. However, the yield stabilized slightly on Thursday morning and was last seen at 1.4671%.
U.S. stock futures also point to further losses during Thursday’s market opening, accelerating Wednesday’s decline for major indices as yields climb. Last week, the 10-year return rose to a high of 1.6% in a move that some described as a ‘flash’ rise, but which fueled fears of stock valuations and rising inflation.
Technical equities were the biggest victims of the retreat, with investors pointing to equities as potential to benefit from an economic recovery, following the vaccination of Covid-19 and progressing to a US fiscal stimulus package.
According to investors, Jerome Powell, chairman of the Federal Reserve, will oversee indications on the direction of growth and inflation later on Thursday.
As for the data, the IHS Markit Construction PMI (Purchasing Managers’ Index) for February Thursday morning will be available from the UK, Germany, France, Italy and the wider eurozone.
This is another busy day for earnings in Europe, which promises to be a major driver of individual stock price action. Thales, Lufthansa, Merck, ProSiebenSat.1 and Aviva were among those reporting before the bell.
Lufthansa saw a smaller net loss than expected in the fourth quarter, but in 2020 saw a loss of 6.7 billion euros ($ 8.1 billion) for the full year. The airline has warned that it will struggle to take advantage of flights before the end of 2021. the pandemic still holds the demand for air travel.
The German food processing company GEA Group climbed 3.7% in the middle of the morning to supply the Stoxx 600 after increasing its profitability in 2020 and forecasting revenue and earnings growth in 2021.
Aviva exceeded the company’s expectations of a 2020 operating profit of £ 3.2 billion ($ 4.5 billion), sold out its remaining businesses in Italy to focus on core markets, and the British insurer’s shares would by 1.8% higher by morning.
At the bottom of the European blue chip index, Anglo-Australian mining titan Rio Tinto has fallen by more than 6% after chairman Simon Thompson announced he would retire from the destruction of a 46,000-year-old indigenous site in the West -Australia.
ProSiebenSat.1 shares fell 4.8% after the company forecast single-digit revenue growth in 2021, despite a strong fourth quarter.
CNBC’s Pippa Stevens contributed to this report.
Sign in to CNBC PRO for exclusive insights and analysis, and live workday programming from around the world.