Markets

European shares lose steam after starting new year with record run

Rising US treasury yields and regulatory worries in China keep investors on edge

Photograph: iStock

Wed Jan 5 2022 - 09:07

European shares lost steam on Wednesday after kicking off the new year with record highs, as rising US Treasury yields and regulatory worries in China kept global investors on edge.

The continent-wide Stoxx 600 index rose 0.03 per cent by 0816 GMT, with auto, chemical and oil & gas stocks rising the most in early deals.

Anticipation of early US interest rate hikes sent Treasury yields surging on Tuesday, spurring a rotation out of high-growth technology names into banks and other economically sensitive sectors.

European tech shares edged up 0.1 per cent after getting slammed on Tuesday.

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Dutch tech investor Prosus, which has a stake in China’s Tencent, slid 3.2 per cent after a top market regulator fined units of several Chinese tech firms for failing to properly report about a dozen deals.

Automaker Stellantis inched up 0.4 per cent on news that its Chrysler brand was planning to shift to an all-electric lineup by 2028 and introduce new products.

German carmaker BMW gained 0.3 per cent as it achieved record sales of over 2.2 million vehicles from its BMW brand in 2021.

The blue-chip FTSE 100 declined 0.2 per cent at 0808 GMT, while the domestically focussed mid-cap index was flat.

Life insurance and banking stocks fell 0.5 per cent and 0.3 per cent, respectively, as ten-year gilt yields fell after a rally in the previous session fuelled by rate hike expectations.

Prime Minister Boris Johnson said on Tuesday that England could withstand a surge in Covid-19 infections without shutting down the economy as Britain reported another record daily high in cases, fuelled by the Omicron variant.

London Stock Exchange Group gained 1.2 per cent after Citigroup upgraded the company's shares to "buy". – Reuters

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