European stocks fell on Friday, playing catch-up with a broad late-Thursday selloff on Wall Street, as inflation concerns continue to weigh on markets and oil prices have slid amid pessimistic demand expectations.
U.S. stocks opened lower, with the Dow DJIA, -0.35% down 0.4% after futures remained positive for much of the Friday premarket. The turn negative came as the Federal Reserve said it would not extend bank capital level exemptions instituted during the pandemic.
European Stocks Fall
Concerns around inflation remain the most dominant force behind the market sentiment, according to Han Tan, an analyst at FXTM, as bond yields remain in the spotlight.
The yield on the benchmark 10-year U.S. Treasury TMUBMUSD10Y, 1.713%, held below 1.7% for much of the day but spiked to 1.72% after the Fed announcement.
Tan also noted that Friday’s “quadruple witching” — a date on which options and futures for individual stocks and stock market indexes expire simultaneously — would likely give rise to heightened volatility. “But unruly bond yields are still likely to be the main culprit going forward,” Tan said.
The COVID-19 pandemic continues to loom over European markets as Paris prepares for a month-long lockdown beginning on Friday night amid fears that France faces another major wave of coronavirus infections.
The rollout of vaccines in the European Union is expected to pick up, following the European Medicines Agency’s conclusion that the COVID-19 vaccine developed by drug company AstraZeneca AZN, -0.29% and the University of Oxford was “safe and effective.”
The regulator investigated the vaccine following blood clots reports in people who had received the shot, with many European countries, including Germany and France, temporarily suspending issuing the vaccine.
Oil prices are slowly climbing after a sharp fall late on Thursday, as “oil sentiment towards Europe seems to be rock-bottom at the moment,” according to analyst Stephen Innes of Axi. The price of benchmark Brent crude BRN00, 1.71%, climbed past the $64 a barrel mark, down from above $68 on Thursday.
“Still, as the vaccine continues coursing its way throughout the world, with major European countries resuming the use of AstraZeneca’s dose, a sustained global demand recovery is expected sometime soon,” Tan added.
European-listed major oil companies led the charge down, with shares in BP BP, -1.68%, Royal Dutch Shell RDSA, -0.89%, Total TOT, -0.05%, and Eni ENI, -1.61% all falling.
BMW BMW -4.22% stock shed more than 3%, erasing some of the gains from a rally earlier this week as the market cheered the company’s full-year earnings and strategy around electric vehicles.
Shares in Italian electricity and gas company Enel ENEL, 2.21%, are up more than 2% after the group’s full-year earnings outpaced expectations.
NatWest NWG, 0.47% stock rose to near 1%, following the U.K. government’s sale of £1.1 billion ($1.5 billion) of shares back to the British bank, representing around 5% of the total shares in issue. The sale will cut the government’s stake to less than 60%.