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European Stocks Sharply Lower as Bonds Weigh; Energy Outperforms on OPEC+ News

Stock Markets33 minutes ago (Mar 05, 2021 03:38AM ET)

(C) Reuters.

By Peter Nurse – European stock markets traded sharply lower Friday, with rising U.S. bond yields and fresh worries about the Covid-19 pandemic spooking investors.

At 3:50 AM ET (0850 GMT), the DAX in Germany traded 0.9% lower, the CAC 40 in France fell 0.7% and the U.K.’s FTSE index dropped 1.1%.

Federal Reserve Chair Jerome Powell made it clear at a conference on Thursday that the central bank wouldn’t be changing its ultra-loose monetary policy any time soon.

These comments prompted Treasury yields to rise close to last week’s highs, something that may bush borrowing costs for households and business higher, crimping the recovery.

The February U.S. jobs report is due at 8:30 AM ET (1330 GMT), and will be studied closely, with the addition of 182,000 payrolls expected, compared with just 49,000 in January.

Adding to the concerns Friday were worries about a global fight for Covid-19 vaccines after a shipment of 250,000 doses of AstraZeneca’s drug that were destined for Australia was blocked by Italy under a new European Union regulation. Italy is one of a number of EU countries to have experienced a rise in Covid-19 cases over the last two weeks.

The World Health Organization warned that the number of new coronavirus infections globally rose last week for the first time in seven weeks.

Oil and gas stocks outperformed as crude prices pushed higher, following the decision of the Organization of the Petroleum Exporting Countries and allies not to increase output in April. Equinor stock rose 1.8% to its highest in over a year, while Royal Dutch Shell (AS:RDSa) stock and Total (PA:TOTF) stock edged down by less than half a percent each.

The group, known collectively as OPEC+, approved the continuation of current curbs on production at its ministerial meeting on Thursday, with small exemptions for Russia and Kazakhstan.

U.S. crude futures traded 1.4% higher at $64.75 a barrel, while the international benchmark Brent contract rose 1.6% to $67.80, its highest since 2019. Both contracts surged more than 4% on Thursday.

In corporate news, Stellantis (PA:STLA) stock rose 0.6% after the world’s fourth largest car maker announced late Thursday it will begin the distribution of the stake it still holds in components group Faurecia to its shareholders.

UBS (SIX:UBSG) stock fell 1.6% after the Swiss banking giant’s net profit dropped marginally last year from the unaudited results, while compensation for its executives soared.

Aggreko (LON:AGGK) stock rose 1.2% after the temporary power provider backed a 2.3 billion pound ($3.2 billion) takeover bid from private equity firms, while London Stock Exchange (LON:LSEG) stock fell 4.5% despite the financial information company reporting a healthy rise in 2020 profit and declaring an increased dividend.

Elsewhere, gold futures fell 0.6% to $1,690.70/oz, while EUR/USD traded 0.3% lower at 1.1926.

European Stocks Sharply Lower; Rising Bond Yields Weigh

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