By Jack Denton
European stocks fell on Friday, playing catch-up with a broad late-Thursday selloff on Wall Street, as inflation concerns continue to weigh on markets and oil prices have slid amid pessimistic demand expectations.
The pan-European Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.46% was 0.8% lower. London’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.20% , the CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.71% in Paris, and Frankfurt’s DAX /zigman2/quotes/210597999/delayed DX:DAX +0.46% were all down around 1%.
U.S. stocks opened lower, with the Dow /zigman2/quotes/210598065/realtime DJIA +0.21% down 0.4% after futures remained positive for much of the Friday premarket. The turn negative came as the Federal Reserve said it would not extend bank capital level exemptions instituted during the pandemic.
Concerns around inflation remain the most dominant force behind market sentiment, according to Han Tan, an analyst at FXTM, as bond yields remain in the spotlight.
The yield on the benchmark 10-year U.S. Treasury /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y 0.00% held below 1.7% for much of the day, but spiked to 1.72% after the Fed announcement.
Tan also noted that Friday’s “quadruple witching” — a date on which options and futures for individual stocks and stock market indexes expire simultaneously — would likely give rise to heightened volatility. “But unruly bond yields are still likely to be the main culprit going forward,” Tan said.
The COVID-19 pandemic continues to loom over European markets, as Paris prepares for a month-long lockdown beginning on Friday night amid fears that France is facing another major wave of coronavirus infections.
The rollout of vaccines in the European Union is expected to pick up, following the conclusion from the European Medicines Agency that the COVID-19 vaccine developed by drug company AstraZeneca /zigman2/quotes/203048482/delayed UK:AZN +1.50% and the University of Oxford was “safe and effective.”
The regulator investigated the vaccine following reports of blood clots in people that had received the shot, with many European countries, including Germany and France, temporarily suspending issuing the vaccine.
Oil prices are slowly climbing after a sharp fall late on Thursday, as “oil sentiment towards Europe seems to be rock-bottom at the moment,” according to analyst Stephen Innes of Axi. The price of benchmark Brent crude climbed past the $64 a barrel mark, down from above $68 on Thursday.
“Still, as the vaccine continues coursing its way throughout the world, with major European countries resuming the use of AstraZeneca’s dose, a sustained global demand recovery is expected sometime soon,” Tan added.
European-listed major oil companies led the charge down, with shares in BP /zigman2/quotes/202286639/delayed UK:BP -0.34% , Royal Dutch Shell /zigman2/quotes/206428183/delayed UK:RDSA -0.40% , Total /zigman2/quotes/202121430/delayed IT:TOT -1.27% , and Eni /zigman2/quotes/209584888/delayed IT:ENI -0.46% all falling.
BMW /zigman2/quotes/202432319/delayed XE:BMW +1.72% stock shed more than 3%, erasing some of the gains from a rally earlier this week as the market cheered the company’s full-year earnings and strategy around electric vehicles.
Shares in Italian electricity and gas company Enel /zigman2/quotes/207756670/delayed IT:ENEL -0.64% are up more than 2% after the group’s full-year earnings outpaced expectations.
NatWest /zigman2/quotes/209265718/delayed UK:NWG +0.79% stock rose near 1%, following the U.K. government’s sale of £1.1 billion ($1.5 billion) of shares back to the British bank, representing around 5% of the total shares in issue. The sale will cut the government’s stake to less than 60%.