European stocks slide to erase large part of weekly gains

Oil and gas, banks, and miners led the declines as the fresh lockdowns dampen hopes

Traders work on the floor of the Dow Industrial Average at the New York Stock Exchange.

Traders work on the floor of the Dow Industrial Average at the New York Stock Exchange.

 

European stocks slid on Friday, erasing a large part of the weekly gains, after France imposed fresh regional lockdowns to curb the spread of the coronavirus amid signs of slowing vaccination in some countries.

The pan-European Stoxx 600 fell 0.6 per cent by 8.09am, tracking a dour session on Wall Street overnight after U.S. bond yields surged.

France’s CAC 40 was down 0.7 per cent after the nation imposed a new four-week lockdown from Friday in 16 regions badly hit by the health crisis.

Oil and gas, banks, and miners led the declines as the fresh lockdowns dampened hopes of a swift economic rebound.

Shares in BP, Royal Dutch Shell and Total fell between 1.8 per cent and 2.9 per cent after crude prices plunged almost 7 per cent overnight on fears the new lockdowns will hurt fuel demand.

China’s stocks opened lower, tracking the slump in US equities overnight after Treasury yields spiked on concerns about rising inflation.

The CSI 300 Index fell by as much as 1.9 per cent, driven by losses in consumer staples and materials shares. Benchmark 10-year Treasury yields touched the highest level since January 2020 on Thursday as traders boosted bets the Federal Reserve will allow inflation to overshoot amid an economic rebound.

The global sell-off will add pressure on China’s equities after the CSI gauge entered a technical correction last week on worries over lofty valuations and possible monetary tightening, with state-backed funds stepping in to stabilize the market.

“Mainland China and Hong Kong markets are following the global sell-off after the bond yield jumped overnight,” said Linus Yip, a strategist at First Shanghai Securities.

“The weak turnover in both markets show investors are cautious. Sell-offs in high-valuation stocks including tech continues, which is in line with a global trend.”

Hong Kong’s Hang Seng Index slid as much as 1.5 per cent amid a broad decline in Asian equity markets.

Foreign investors turned net sellers of Chinese A-shares on Friday morning via the trading links, offloading a net 657 million yuan ($101 million) worth of mainland stocks.

If the trend holds until the close, it would be their first day of net selling since March 8th -- when the market fell into a technical correction from its February 10th high.

Still, investors say no new closing lows are likely to be reached on the mainland, particularly as the market has mostly priced in fears over the recent trend in rising US yields.

London’s FTSE 100 fell, hit by higher bond yields globally, while energy stocks dropped as fresh Covid-19 lockdowns across Europe dampened hopes of a swift recovery in demand.

The blue-chip FTSE 100 index was down 1.2 per cent, with oil heavyweights BP and Royal Dutch Shell falling 3.2 per cent and 3 per cent, respectively.

Mining and bank stocks including Rio Tinto, Anglo American, BHP Group, HSBC and Barclays were also among the biggest drags on the index.

A weaker overnight finish on Wall Street following a jump in US Treasury yields also spilled over to Asian equities earlier in the day.

In the UK, data showed consumer morale jumped to a one-year high in March as the public became increasingly confident of a strong economic rebound from the Covid-19 pandemic, a day after the Bank of England also said the domestic recovery was gathering pace.

The domestically focused mid-cap FTSE 250 index fell 0.8 per cent, dragged down by industrial stocks.

Pub operator J D Wetherspoon fell 1.1 per cent, on a half-yearly loss, compared with a year-earlier profit, as hundreds of its pubs across the UK were shuttered through the key holiday season due to the coronavirus-led restrictions.

Natwest Group rose 0.4 per cent, after agreeing to buy back 1.1 billion pounds of shares from the British government. – Agencies