LONDON — European stocks retreated on Tuesday amid a choppy morning of trading, with tech stocks following their global counterparts lower on fears over rising bond yields.
The pan-European Stoxx 600 fell 1.2% by late morning, with the tech sector shedding 3.2% to lead losses as all sectors and major bourses slid into negative territory.
European markets are breaking from a cautious trend seen in Asia and the U.S., with investors in the former monitoring technology stocks regionally after a big tech sell-off overnight on Wall Street.
The bank said its reported profit before tax for 2020 fell 34% from a year ago to $8.78 billion. That beat analysts’ expectations of $8.33 billion, according to estimates compiled by HSBC.
In the U.S., attention will be focused on Federal Reserve Chairman Jerome Powell on Tuesday as he delivers his semi-annual testimony on the economy before the Senate Banking Committee. His comments on rates and inflation could determine the market direction for the week.
Steep losses in technology shares dragged down the S&P 500 during the U.S. trading session on Monday, as a continuous rise in bond yields dented the appetite for growth stocks. Meanwhile, investors piled into economically-sensitive names to bet on a comeback.
On Monday, European Central Bank President Christine Lagarde said in a speech that the central bank is “closely monitoring the evolution of long-term nominal bond yields.” European sovereign bond yields moved lower in response to her remarks.
On the data front, euro zone inflation rose 0.2% month-on-month in January, Eurostat confirmed on Tuesday, breaking from a months-long trend of falling prices.
In terms of individual share price movement, Airplane engine manufacturer Rolls-Royce climbed 5.7% by late morning, benefiting from the prospect of an easing of travel restrictions in the U.K. The British government set out proposals on Monday on how and when it plans to start lifting coronavirus restrictions. The easing will be gradual, but the government plans to have all restrictions lifted by June 21.
Spanish travel and tourism IT company Amadeus also gained 5.7%.
At the bottom of the European blue chip index, German cooking appliance manufacturer Rational fell more than 12% after issuing a weaker-than-expected forecast.
– CNBC’s Yen Nee Lee contributed to this market report.
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