Technology stocks were bearing the brunt of European equity losses on Friday, playing catch up to a rough day on Wall Street.
The Stoxx Europe 600 index
fell 0.5% to 409.55, bringing the weekly loss to just over 1%. The German DAX
slipped 0.2%, the French CAC 40
fell 0.5% and the FTSE 100
dipped 0.2%. The euro
and the pound
fell at the expense of a stronger U.S. dollar
The losses were contained, though, as a selling frenzy for global bonds eased up. A climb for the U.S. 10-year government bond
above a one-year high of 1.5% on Thursday triggered a rout for stocks, but that yield has since moved back down to 1.46%. The yield on the 10-year Germany bund
was hovering at just under year highs at 0.274%.
“The fear about the rise in interest rates is that they are likely to choke off the economic recovery,” said Naeem Aslam, chief market analyst at AvaTrade.
European Central Bank Executive Board Member Isabel Schnabel said on Friday that the central bank would need to monitor long-term real rates.
“A rise in real long-term rates at the early stages of the recovery, even if reflecting improved growth prospects, may withdraw vital policy support too early and too abruptly given the still fragile state of the economy,” she said in a virtual conference. “Policy will then have to step up its level of support.”
Europe’s tech stocks were selling off in tandem with Thursday’s losses on Wall Street, which also spilled over into Asia. Aslam said investors had been moving out of the tech sector and into those more geared to an economic recovery, though Thursday’s selloff was uniform.
In the chip sector, shares of Dutch group ASML Holding
fell around 1% each. ASM International
shares dropped 2%.
Shares of major oil companies BP
were down 1.7% and nearly 1%, respectively, tracking lower crude futures
Airlines were in focus, with shares of International Consolidated Airlines Group
rising 4%. The operator of British Airways, Iberia and other airlines swung to a record €7.4 billion ($9 billion) loss, including exceptional items relating to fuel and currency hedges, early fleet retirement, and restructuring costs. The company said it can’t provide 2021 guidance due to COVID-19 pandemic uncertainty.
Rising in tandem were shares of easyJet
and holiday tour operator TUI
But shares of Norwegian Air Shuttle
fell 3%, after the airline said losses surged in the fourth quarter amid rising impairments. The company said it would next week publish a detailed plan to support its future.
Deutsche Bank has taken the pulse of a wave of individual investors that blossomed in 2020 and drove a market rally from last March. And they are ready to keep buying stocks.
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