European markets are making a cautious opening higher on Friday as investors monitor rising bond yields, corporate earnings and a batch of key economic data out of the euro zone.
The British FTSE 100 is seen entering 2 points higher to 6,619, the German DAX is ready to climb around 60 points to 13,947 and the French CAC 40 is expected to get around 15 points to open at 5,743, according to IG data.
European stocks are expected to see a weak move from Asia-Pacific, where markets generally declined during trading on Friday, following the loss of Wall Street on Thursday as U.S. Treasury yields rose and concerns about higher inflation rose. caused a recent rally in global markets going out.
The yield on the U.S. Treasury’s 10-year benchmark note was back above 1.3% early Friday morning. Yields tend to rise in anticipation of inflation as bond investors begin to believe that central banks will take their foot off the gas and reduce asset purchases. Higher yields can also mean more debt servicing for major companies, which tend to collapse stock markets as traders reassess the environment for investment.
Futures linked to major U.S. indices were slightly lower in overnight trading. U.S. Treasury Secretary Janet Yellen told CNBC on Thursday that a major stimulus package is still needed to burn the economy on all cylinders again.
Back in Europe, UK Prime Minister Boris Johnson will chair a landmark meeting of leaders of G-7’s major economies on Friday, and is expected to set a goal to cut the time to develop new vaccines by two-thirds to 100 day.
Meanwhile, the German governor on Thursday declared the AstraZeneca-Oxford University vaccine “very effective” and said it has short-term negative side effects.
Corporate earnings will remain a key driver for individual share price action on Friday, with Danone, Hermes, Renault, Allianz and Swiss Re among the blue chip companies reporting ahead of the bell.
Investor focus will also be involved in a number of economic data, most notably Markit flash readings PMI (index of purchasing managers) in February out of France, Germany and the euro zone as a whole.
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