By Barbara Kollmeyer
Technology stocks were bearing the brunt of European equity losses on Friday, playing catch up to a rough day on Wall Street.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.81% fell 0.5% to 409.55, bringing the weekly loss to just over 1%. The German DAX /zigman2/quotes/210597999/delayed DX:DAX -0.67% slipped 0.2%, the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.88% fell 0.5% and the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.21% dipped 0.2%. The euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.0426% and the pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.2041% fell at the expense of a stronger U.S. dollar /zigman2/quotes/210598269/delayed DXY -0.31% .
The losses were contained, though, as a selling frenzy for global bonds eased up. A climb for the U.S. 10-year government bond /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -1.73% above a one-year high of 1.5% on Thursday triggered a rout for stocks, but that yield has since moved back down to 1.46%. The yield on the 10-year Germany bund /zigman2/quotes/211347112/realtime BX:TMBMKDE-10Y +7.30% was hovering at just under year highs at 0.274%.
“The fear about the rise in interest rates is that they are likely to choke off the economic recovery,” said Naeem Aslam, chief market analyst at AvaTrade.
European Central Bank Executive Board Member Isabel Schnabel said on Friday that the central bank would need to monitor long-term real rates.
“A rise in real long-term rates at the early stages of the recovery, even if reflecting improved growth prospects, may withdraw vital policy support too early and too abruptly given the still fragile state of the economy,” she said in a virtual conference . “Policy will then have to step up its level of support.”
Europe’s tech stocks were selling off in tandem with Thursday’s losses on Wall Street, which also spilled over into Asia. Aslam said investors had been moving out of the tech sector and into those more geared to an economic recovery, though Thursday’s selloff was uniform.
In the chip sector, shares of Dutch group ASML Holding /zigman2/quotes/210293876/composite ASML +1.74% /zigman2/quotes/206208657/delayed NL:ASML -1.79% and STMicroelectronics /zigman2/quotes/207734906/composite STM +1.48% /zigman2/quotes/204485995/delayed FR:STM -0.93% fell around 1% each. ASM International /zigman2/quotes/201180544/delayed NL:ASM -2.40% shares dropped 2%.
Shares of major oil companies BP /zigman2/quotes/202286639/delayed UK:BP +0.61% /zigman2/quotes/207305210/composite BP +1.99% and Total were down 1.7% and nearly 1%, respectively, tracking lower crude futures /zigman2/quotes/209723049/delayed CL00 +0.04% prices.
Airlines were in focus, with shares of International Consolidated Airlines Group /zigman2/quotes/208070069/delayed UK:IAG +2.09% rising 4%. The operator of British Airways, Iberia and other airlines swung to a record €7.4 billion ($9 billion) loss, including exceptional items relating to fuel and currency hedges, early fleet retirement, and restructuring costs. The company said it can’t provide 2021 guidance due to COVID-19 pandemic uncertainty.
But shares of Norwegian Air Shuttle /zigman2/quotes/204014691/delayed NO:NAS +1.15% fell 3%, after the airline said losses surged in the fourth quarter amid rising impairments. The company said it would next week publish a detailed plan to support its future.