Economic news

European Stocks Slide on Powell Remarks, Set for Weekly Gain

Rising U.S. bond yields put European equities under pressure again on Friday after Federal Reserve Chair Jerome Powell’s remarks failed to soothe investor concerns about a recent surge in borrowing costs.

The pan-European STOXX 600 fell 0.7%, with shares of travel, media, and financial services companies leading the declines.

While Powell said the rise in yields was “notable”, he did not consider it a “disorderly” move, or one that pushed long-term rates so high the Fed might have to intervene in markets more forcefully to bring them down.

The comments fuelled a sell-off on Wall Street on Thursday, pushing the tech-heavy Nasdaq to erase its yearly gains. European tech shares also fell 0.5%, on course for their second weekly loss.

“The markets wanted hints as to what the central bank would do if the situation worsens, and when that didn’t materialise, equities took a hit,” Connor Campbell, financial analyst at SpreadEx wrote in a note. “That’s fed into a rough European open.”

Elevated yields have piled pressure on high-growth tech companies and steady dividend-paying sectors such as utilities and consumer staples in the recent weeks.

Still, the STOXX 600 was on course to post a 1.2% weekly rise as investors bought economically sensitive stocks such as automakers, insurance, oil & gas companies on bets of a speedy economic bounceback this year.

Data showed orders for German-made goods rose by twice as much as expected in January as robust foreign demand more than offset domestic weakness.

Oil stocks fell just 0.2%, supported by crude prices at near 14-month highs after OPEC and its allies agreed not to increase supply in April.

London Stock Exchange Group dropped almost 5% despite posting steady full-year results for 2020 and announcing a 7% dividend increase.

French aircraft manufacturer Dassault Aviation fell 3.1% after recording a drop in quarterly adjusted operating income.

Reporting by Sruthi Shankar in Bengaluru; editing by Uttaresh.V, Bernard Orr

Source: Reuters

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