LONDON – European markets retreated slightly on Friday, but remain on track for a positive week as rising Treasury yields resurfaced some investor caution.
The pan-European Stoxx 600 fell 0.2% in early trading, with technology stocks falling 1.2% to cause losses, while banks rose 0.6%.
European stocks received a reasonably strong transfer from Asia-Pacific, where markets advanced largely during trading on Friday after the S&P 500 hit record highs in U.S. trading hours on Thursday.
The push on Wall Street came after U.S. President Joe Biden signed the law into a $ 1.9 trillion coronavirus relief package, which will send direct payments of up to $ 1,400 to most Americans. On Friday, futures tied to major U.S. indices mixed in the early premarket markets.
However, the yield on the U.S. Treasury’s ten-year benchmark bond rose again on Friday morning after the stimulus passed, reaching 1.6% briefly.
The European Central Bank on Thursday pledged to step up its bond-buying efforts “significantly” in the second quarter after lending costs rose across the continent, with European bond yields following US Treasury yields higher over the last month.
Investors were concerned that rising bond yields could derail Europe’s economic recovery, raising the borrowing costs of countries already struggling with the coronavirus crisis.
The European Union on Thursday approved Johnson & Johnson’s single-shot Covid-19 vaccine as the bloc wants to start its slow vaccination shift.
Meanwhile, Canada has insisted that inoculation of AstraZeneca and Oxford University is safe after suspending its use in Denmark, Norway and Iceland over reports of blood clotting in some people who had been shot.
In terms of data, the UK economy fell 2.9% in January from the previous month, according to official data shown on Friday, a less severe contraction than expected as the country returned to enter the national closure.
“While the national blockade closed several industries, the success of the consumer industries was not as bad as it could have been,” said James Smith, a market economist developed at ING.
“But what really stands out is health spending, where the increase in the government’s testing and screening program and vaccination programs added 0.9% just to GDP figures.”
The British luxury fashion brand Burberry saw its shares rise more than 7% to the top of the Stoxx 600 at commercial beginnings, after updating its guidelines due to a sharp rise of sales.
At the bottom of the index, real estate developer Berkeley Group fell 4.8% after projecting its profits in 2021.
According to Reuters, Credit Suisse fell 4% in response to questions from regulators about supply chain financing funds related to the fall of Greenhill Capital.
– CNBC’s Saheli Roy Choudhury contributed to this report.
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