March 4 (Reuters) – European stocks closed lower Thursday as a renewed spike in US bond yields and expectations of a surge in inflation hurt risk appetite, with heavyweight miners and tech stocks falling.
The pan-European STOXX 600 index
fell 0.4% with miners
fall most strongly among the European sectors. UK listed heavyweights Rio Tinto
and BHP Group
Lost 7.7% and 5.8%, respectively, as they were trading ex-dividend. Stocks
, the driver behind the market rebound from pandemic lows, fell 3.3% as a global semiconductor shortage weighed on the sector, while a surge in bond yields also scrutinized high stock valuations. US /
Dutch company ASML Holding NV
declined 6.1% despite news that a contract to sell chip manufacturing equipment to China’s largest chip maker, SMIC, was renewed
. One can understand why investors are concerned about valuations in the US, especially in the technology space. The same is not true in Europe, where valuations are much lower, « said Michael Hewson, chief market analyst at CMC (NS:
) Markets wrote in a note.
Unlike US stocks, the STOXX 600 has not yet hit pre-pandemic highs as a new round of lockdowns and slow economic growth prevented an early rebound from the lows in March last year .
Market participants also awaited comments from Federal Reserve Chairman Jerome Powell on the recent rise in borrowing costs. Central bank policymaker Klaas Knot said the recent rise in the cost of borrowing in the eurozone could be due to improved growth and inflation prospects. A steeper curve is to some extent a sign that monetary policy is bearing fruit, « Rabobank analysts wrote in a note. » However, the ECB is also concerned that rising too fast could halt the fragile recovery on its way. «
Bond yields in the euro zone are significantly lower than in the US. Many investors welcome the recent surge in yields as a sign of economic reflation.
Sefensive sectors such as utilities
, Eating & drink
and real estate
Among the individual moving companies Unibail-Rodamco-Westfield
– Europe’s largest retail property owner – has outperformed the STOXX 600 after French tycoon Xavier Niel increased his stake in the company. Channel Prosiebensat.1 Medien
down 7.3% after forecasting sales and earnings would grow single digits this year after strong fourth-quarter earnings. Lufthansa airline
declined 3% as it posted record losses for 2020 and scaled back capacity plans for 2021 as the disruption from COVID-19 dragged on.
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