European markets close lower as rising U.S. yields reignite global stock jitters

Key Points
  • The pan-European Stoxx 600 closed down by 0.78%, having earlier been down as much as 1%.
  • Fed Chair Jerome Powell said the economic reopening could lead to some price inflation.
  • The benchmark U.S. 10-year Treasury yield popped above 1.6% after a strong U.S. jobs report.

European markets closed lower on Friday as rising U.S. bond yields continued to weigh on investor sentiment.

European markets

The pan-European Stoxx 600 closed down by 0.78%, having earlier been down as much as 1%. Travel and leisure stocks dropped 4% as most sectors and major bourses entered negative territory.

Shares in Europe received a weak handover from Asia-Pacific, where MSCI's broadest index of stocks dropped 0.89% during Friday's trade. Chinese Premier Li Keqiang announced the world's second-largest economy would target growth of over 6% for 2021.

On Wall Street, stocks dipped Friday, pressured by a sell-off in high-flying tech names, while a stronger-than-expected jobs report helped support sentiment.

The Labor Department on Friday reported that nonfarm payrolls jumped by 379,000 for the month and the unemployment rate fell to 6.2%. That compared to expectations of 210,000 new jobs and the unemployment rate to hold steady from the 6.3% rate in January, according to Dow Jones.

The yield on the benchmark U.S. 10-year Treasury popped above 1.6% to hit a 2021 high after the February jobs report. The move in bond yields was also catalyzed by comments from U.S. Federal Reserve Chair Jerome Powell

On Thursday, Powell said the economic reopening could "create some upward pressure on prices," noting that he expects the central bank to be "patient" on policy action even if the economy sees "transitory increases in inflation."

Economists could be 'underestimating' the rebound: FTSE Russell
Economists could be 'underestimating' the rebound: FTSE Russell

However, Powell acknowledged that the recent rise in yields had caught his attention.

Back in Europe, the European Union is planning to extend its export controls on Covid-19 vaccines after a shipment of AstraZeneca immunizations to Australia from the EU was blocked, Reuters reported Thursday citing two sources.

German Finance Minister Olaf Scholtz has said Europe's largest economy will need a supplementary budget for 2021 in order to finance additional costs relating to the coronavirus pandemic.

In corporate news, Stellantis announced Thursday that it will distribute its stake in French auto parts manufacturer Faurecia to shareholders. The company, born from the merger of Fiat Chrysler and Peugeot said in a statement that distribution of the shares, and an additional 308 million euros ($368.46 million) from a previous Faurecia equity sale, will be decided at a meeting on Monday.

In terms of individual share price movement on Friday, Carnival led a broad sell-off in travel shares, falling 11.6% to the bottom of the Stoxx 600. BT shares rose 4.9% toward the top of the European benchmark. The U.K. telecom firm's CEO indicated he might resign unless the company finds a successor to its chairman, Sky News reported.

- staff contributed to this report.

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