The Business Times

Europe: Shares retreat on rising bond yields; logs best week since November

Published Sat, Mar 13, 2021 · 06:16 AM

[BENGALURU] Rising bond yields dragged European stocks lower on Friday, although major bourses were set for weekly gains as stimulus and vaccination programmes spurred hopes of a solid economic recovery.

The pan-European Stoxx 600 index fell 0.3 per cent after a four-session winning streak drove it to pre-pandemic highs a day earlier. The index posted weekly gains of 3.5 per cent, its best performance since November.

Tame US inflation data and signs from the European Central Bank that it was ready to accelerate money-printing to keep a lid on borrowing costs helped boost risk appetite this week.

"It's not quite the end to the week that investors had hoped," said Russ Mould, investment director at AJ Bell "However, markets are still ahead on the week and the recent sell-off in tech stocks looks like it has stabilised, which is important for investor sentiment." With government bond yields in the US and Europe rising again on Friday, investors took some money off the table.

"On one hand, we had the ECB that tried to talk down yields, but at the same time we had the final approval of the big Biden stimulus package that drove US yields somewhat higher again," said Bert Colijn, senior euro zone economist at ING.

US President Joe Biden signed a US$1.9 trillion stimulus bill into law on Thursday, with direct deposits from the legislation expected to go to Americans as early as this weekend.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

VIEW ALL

While the stimulus is expected to give a boost to the US economy, it has also raised worries about a spike in inflation that could push central banks to tighten monetary policy.

The tech sector fell the most in Europe, down 2.1 per cent, while automakers and miners also weighed.

Dutch tech investor Prosus, which holds a third of Chinese tech giant Tencent Holdings, dropped 6.7 per cent as China's market regulator fined 12 companies, including Tencent, related to deals that demonstrated illegal monopolistic behaviours.

German carmaker Daimler declined 1.9 per cent after French rival Renault sold its entire stake in the company at a discount.

BMW fell 1.3 per cent after saying its operating profit for 2020 fell due to the COVID-19 pandemic, despite a strong second-half rebound in sales.

British luxury group Burberry jumped 6.9 per cent to the top of STOXX 600 after saying it had seen a strong rebound in sales since December.

Italy's Brunello Cucinelli surged 8.2 per cent after the luxury goods maker raised its sales forecast for the year on expectations that the end of the pandemic was near.

REUTERS

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to  t.me/BizTimes

Capital Markets & Currencies

SUPPORT SOUTH-EAST ASIA'S LEADING FINANCIAL DAILY

Get the latest coverage and full access to all BT premium content.

SUBSCRIBE NOW

Browse corporate subscription here