By Peter Nurse
Investing.com - European stock markets are seen opening lower Thursday, following weakness on Wall Street and in Asia overnight amid resurgent worries over higher bond yields and extended equity valuations.
At 2:10 AM ET (0710 GMT), the DAX futures contract in Germany traded 0.1% lower, CAC 40 futures in France dropped 0.5% and the FTSE 100 futures contract in the U.K. fell 0.4%.
The equity indices all closed lower on Wall Street Wednesday, with the tech-heavy Nasdaq Composite leading the way by falling 2.7%. This weakness carried over into Asia, with the Nikkei in Japan losing 2.1% and Hong Kong’s Hang Seng down 2.5%, and Europe is set to follow suit.
This followed more gains in U.S. Treasury yields, with the benchmark 10-year yield last seen trading at 1.48% after climbing to a high of 1.49% on Wednesday before retreating slightly. This sparked concerns of a potential pickup in inflation and an earlier-than-expected decision from the Federal Reserve to tighten its currently very loose monetary policies.
Fed Chairman Jerome Powell is due to speak at 12:05 PM EST (1705 GMT), and investors will look to see if he tries to downplay the recent rise in Treasury yields.
Yields of major European government bonds, with German bunds being the main example, have also risen, but by less than their American counterparts, amid some mixed signaling from the European Central Bank over whether or not it needs to react.
Rising yields lessen the attractiveness of stocks whose expected profits lie far in the future.
Meanwhile, the economic impact of the coronavirus pandemic is still being felt keenly in Europe. British new car registrations fell by roughly 36% year-on-year in February, with volumes at their lowest monthly level since 1959, according to the Society of Motor Manufacturers and Traders.
In corporate news, the tech sector will be in focus following on from the sharp losses on the tech-heavy Nasdaq Composite index late Wednesday.
Elsewhere, airline Lufthansa (DE:LHAG) posted a smaller-than-expected net loss in the fourth quarter and forecast an operating loss in 2021 below last year's level, while German drugmaker Merck KGaA (DE:MRCG) offered a solid outlook for 2021, expecting earnings to grow in the high single-digit to low teens percentage range.
Oil prices climbed higher Thursday, as traders positioned themselves ahead of a meeting of the Organization of the Petroleum Exporting Countries and allies, a grouping known as OPEC+.
This influential group had been expected to ease production cuts, but Reuters is reporting that they are now considering rolling over the current output curbs into April, allowing the recovery in oil demand to become more established.
This has allowed market participants to look through Wednesday’s surge in U.S. crude stockpiles, jumping a record 21 million barrels last week, especially as this figure was influenced by the recent spell of wintry weather in the southern states.
U.S. crude futures traded 0.5% higher at $61.57 a barrel, while the international benchmark Brent contract rose 0.9% to $64.62.
Elsewhere, gold futures rose 0.2% to $1,718.75/oz, while EUR/USD traded 0.1% lower at 1.2056.