European Stocks Slide on Powell Remarks, Set for Weekly Gain

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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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