European Stocks Close Sharply Lower

European markets ended sharply lower on Friday as concerns over inflation and rising U.S. Treasury yields continued to weight on equities.

Bond yields in the U.K. too rose today, lifted by Bank of England Chief Economist Andy Haldane’s warning that it will be tough to rein in inflation.

Investors were also digesting a slew of earnings reports and economic data.

The pan European Stoxx 600 declined 1.64%. The U.K.’s FTSE 100 ended lower by 2.35%, France’s CAC 40 slid 1.39% and Germany’s DAX lost 0.67%, while Switzerland’s SMI lost 1.28%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Iceland, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden and Turkey all closed notably lower. Greece and Ukraine edged up slightly.

In the UK market, Rightmove ended nearly 7% down after reporting a sharp drop in both revenues and profits for last year. Anglo American, British Land Company, Scottish Mortgage, Imperial Brands, Glencore, Rio Tinto, Hikma Pharmaceuticals, Fresnillo, BP, Royal Dutch Shell, M&G, BAE Systems, Standard Life, BHP Group and Standard Chartered lost 3 to 7%.

Selling was so broad-based that only three stocks among the FTSE 100 index components moved higher. IAG surged up 3.1%, while Reckitt Benckiser and Kingfisher gained 0.8% and 0.6%, respectively.

In the French market, Engie ended more than 4% down after it slipped to a net loss in FY20. The company reported that its fiscal 2020 net loss Group share was 1.5 billion euros, compared to prior year’s profit of 1 billion euros.

Veolia, ArcelorMittal, Danone, Sodexo, Valeo, Airbus Group, Safran, BNP Paribas, Societe Generale and Pernod Ricard declined 2 to 4.3%.

On the other hand, Teleperfomance surged up nearly 7% after JPMorgan raised its target price for the stock following a strong earnings report.

Saint Gobain gained about 3%, while Michelin and Air France-KLM both ended higher by a little over 1%.

In Germany, Deutsche Bank, Beiersdorf, Covetro, Bayer, HeidelbergCement, MTU Aero Engines, Siemens, Adidas and Merck declined sharply, while Infineon Technologies, Lufthansa, Volkswagen, Fresenius and Daimler moved up.

In economic releases, the French economy contracted more than initially estimated in the fourth quarter, revised data from the statistical office Insee showed.

Due to the second national lockdown and curfews, gross domestic product fell 1.4% sequentially in the fourth quarter. This was slightly bigger than the 1.3% fall estimated on January 29. The economy had rebounded 18.5% in the third quarter.

French consumer price inflation slowed in February reflecting the downturn in manufactured goods prices and the slowdown in services prices, the provisional estimate from the statistical office Insee showed.

Consumer prices gained 0.4% year-on-year in February, slower than the 0.6% rise in January. In the same period last year, inflation was 1.4%. Economists had forecast an annual rate of 0.3%.

German import prices continued to fall in January, data from Destatis revealed. Import prices declined 1.2% year-on-year, but slower than the 3.4% decrease seen in December and economists’ forecast of -2.1%.

Switzerland’s economic growth eased sharply in the fourth quarter as the restrictions imposed to contain the coronavirus pandemic weighed heavily on the service sector, the State Secretariat for Economic Affairs, or SECO, said Friday.

Gross domestic product gained 0.3% sequentially, much slower than the 7.6% expansion seen in the third quarter. GDP was forecast to climb 0.1%.

On a yearly basis, GDP dropped 1.6%, following a 1.4% decrease in the third quarter. However, this was slower than the 2.1% decrease economists’ had forecast.

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