European stock markets retreated Wednesday, consolidating after recent gains with investors growing wary of rising bond yields while the earnings season continues.
European markets have rallied strongly over the last week or so, amid growing hopes the rollout of Covid-19 vaccines and the coming of spring will result in the reasonably prompt ending of the severe restrictions in place to combat the spread of the virus.
That said, regional leaders have been cautious about lifting restrictions, wary of new and more infectious strains of the virus that came to light in the U.K. and South Africa.
However, investors are now beginning to turn their focus away from virus-related stats, looking carefully at climbing bond yields as higher rates could prompt some to rotate out of equities and into bonds.
The benchmark 10-year U.S. Treasury yield rose 9 basis points on Tuesday to top 1.3%, a level not seen since February 2020.
In corporate news, Rio Tinto (NYSE:RIO) stock rose 1.5% after the world’s biggest producer of iron ore announced a record $6.5 billion final dividend after reporting a 20% jump in annual profit in 2020.
Elsewhere, Kering (PA:PRTP) stock slumped 8.4% as sales at the French fashion house, the owner of Gucci, fell more than expected in the fourth quarter, as the coronavirus pandemic hurt tourist travel and shopping habits globally.
British American Tobacco (NYSE:BTI) stock fell 6.2% after the cigarette maker said cigarette volumes dropped 4.6% over the year to end-December with revenues down 1.1%.
In economic data, U.K. CPI climbed 0.7% on the year in January, a small rise from the 0.6% seen in December, after prices only fell by 0.2% on the month.
Oil prices edged higher Wednesday, remaining at elevated levels on the back of the cold snap cutting output from oil and gas fields in the U.S. state of Texas, the country's biggest oil-producing region.
U.S. crude oil supply data from the American Petroleum Institute will be released later in the session.