Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

European shares drop as bond rout sparks profit taking

Stock MarketsFeb 26, 2021 04:50AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt

By Shashank Nayar

(Reuters) - European stocks fell on Friday as investors booked profits in high-flying technology shares due to concerns over rising inflation and interest rates on the back of a jump in bond yields.

The benchmark European stock index was down 0.6%, paring earlier losses but still on track to record its first weekly fall this month. London's FTSE 100 slipped 0.2% and Germany's DAX lost 0.1%, both well off session lows.

"Equity markets across the U.S. and Europe are quite expensive now and with bond yields constantly rising, the fixed income market is proving to be more attractive than the riskier equity market," said Roland Kaloyan, a strategist at SocGen.

"Investors are actually looking at the pace at which yields drop and the current speed is quite concerning for equity markets."

Asian markets fell to a one-month low, while the dollar rose from a three-year trough as the 10-year U.S. Treasury yield hit a one-year high, sparking fears the heavy losses could trigger distressed selling in other assets. [MKTS/GLOB] [FRX/]

Euro zone government bond yields, however, stabilised on Friday, although Germany's benchmark yield was still headed for its biggest monthly jump since 2016.

Technology stocks bore the brunt of this week's sell-off after powering the global stock market recovery last year as assurances from European Central Bank chief Christine Lagarde and other policymakers failed to stem the rise in yields.

Still, the benchmark STOXX was tracking its best monthly gain since November, helped by a rotation into energy, banking and mining stocks on expectations of a pickup in business activity following vaccine rollouts.

Better-than-expected fourth-quarter earnings have also reinforced optimism about a quicker corporate rebound this year. Of the 194 companies in the STOXX 600 that have reported quarterly earnings so far, 68% have beaten analysts' estimates, according to Refinitiv.

"As recovery hopes gain ground with the economy re-opening and vaccines coming up, coupled with earnings being relatively positive, the near-to-mid-term outlook for equities seems positive with yield movements still a part of the equation," said Keith Temperton, an equity sales trader at Forte Securities.

Germany's Deutsche Telekom (OTC:DTEGY) gained 0.3% after it reported forecast-beating fourth-quarter results as its merged U.S. unit T-Mobile continued to drive growth.

British Airways-owner IAG (LON:ICAG) gained 3.2% even after it recorded a 7.43 billion euro ($9 billion) loss last year and warned it could not say when normal flying conditions would return.

European shares drop as bond rout sparks profit taking
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email