By Barbara Kollmeyer
European stocks shifted into the red on Wednesday afternoon, as Wall Street stocks turned lower and global bond yields resumed their rise. U.K. stocks were clinging to gains after the spring budget message.
Reversing earlier gains, the Stoxx Europe 600 (STOXX:XX:SXXP) fell 0.6% to 410.92, after two straight winning sessions. Regional gains were led by the FTSE 100 index (FTSE:UK:UKX) , which climbed 0.3% as the budget was announced with help for the home-building and hospitality sectors.
The German DAX (XEX:DX:DAX) fell 0.2% and the French CAC (PAR:FR:PX1) dipped 0.1%. The pound (XTUP:GBPUSD) fell 0.2% and the euro (XTUP:EURUSD) fell by the same amount against the dollar, which was on stronger footing.
A worry for investors, bonds leapt into focus again, with the yield on the 10-year German bund (XTUP:BX:TMBMKDE-10Y) rising 6 basis points to -0.288% and the yield on the 10-year U.K. gilt (XTUP:BX:TMBMKGB-10Y) up 10 basis points to 0.791%. The yield on the U.S. 10-year note (XTUP:BX:TMUBMUSD10Y) rose 7 basis points to 1.483%. The moves came after an easing of those yields on Tuesday.
Wall Street stocks fell in early trading , after weaker-than-expected economic data and the upward climb that renewed for bond yields. Higher bond yields have taken a toll on stocks around the world as they imply rising borrowing costs for corporations and individuals.
In Europe, investors were watching for a lockdown easing strategy to come from German Chancellor Angela Merkel, as pressure builds to reopen the region’s biggest economy. Merkel is expected to agree to gradually relax measures, according to a draft plan viewed by Reuters .
Even if overall indexes were weaker, automobile makers’ shares remained elevated. Renault (PAR:FR:RNO) shares gained 4%, after the French auto group was upgraded to buy from neutral at UBS. Shares of Porsche (ETR:XE:PAH3) and BMW (ETR:XE:BMW) rose 4% each.
And newly combined auto maker Stellantis (NYS:STLA) — a product of the merger of Fiat Chrysler Automobiles and Peugeot — said it expects an adjusted operating income margin of between 5.5% and 7.5% for 2021. Shares rose over 2%.
Banks were rising, notably in London, with heavily-weighted HSBC (NYS:HSBC) up 2%. London’s gainers included hospitality names and home builders after measures were announced in the spring budget on Wednesday afternoon. Shares of pub owner Whitbread (LON:UK:WTB) climbed 5% and home builder Persimmon (LON:UK:PSN) climbed 4%.
Persimmon said pretax profit and revenue fell in 2020, due to the COVID-19 pandemic, but that recovery in the second half has continued into 2021.
Shares of Avast (LON:UK:AVST) fell over 2%, even after the cybersecurity company reported higher profit and revenue, and said it sees further organic revenue growth ahead.