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Tech sell-off on Wall Street unsettles European markets

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Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2 min read
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Federal Reserve Chairman Jerome Powell. Photo: Greg Nash/Pool via AP
Federal Reserve Chairman Jerome Powell. Photo: Greg Nash/Pool via AP

European stock markets suffered a weak close on Thursday as renewed selling on Wall Street hit confidence.

Major markets across the continent had opened half a percent higher on Thursday, buoyed by comments from US Federal Reserve chair Jerome Powell overnight. Powell had signalled that support for major markets would continue for the foreseeable futures and downplayed inflation expectations, which sparked a late rally on Wall Street on Wednesday.

READ MORE: Chancellor urged to spend another £100bn driving COVID recovery

However, stocks sold-off in New York when trading resumed on Thursday. The S&P 500 (^GSPC) was down 1% by the time trade finished in Europe, while the Dow Jones (^DJI) had fallen 0.6% and the Nasdaq (^IXIC) had lost 1.5%.

"US tech stocks are once again at the forefront of the market selling," said Josh Mahoney, a senior market analyst at IG. "After a year that saw tech leave traditional companies in their wake, the past week has seen investors increasingly seek safety on from some of the stocks hardest hit by the pandemic."

Shares in Tesla (TSLA) fell 4.4%, Alphabet (GOOGL) dropped 2%, and Facebook (FB) shed 1.5%.

"The rise in bond yields does tech few favours, with value expected to outperform as long as yields are on the rise," Mahoney said.

The renewed selling unsettled European markets, although indexes on the continent still outperformed US counterparts. The FTSE 100 (^FTSE) closed down 0.1%, the CAC 40 (^FCHI) lost 0.2%, and the DAX (^GDAXI) fell 0.7%.

WATCH: Stocks Await Earnings for Direction

Thursday marked the busiest day of the week in the European earnings calendar. Shares in Standard Chartered (STAN.L) slumped 6% in London after the bank reported a 40% drop in annual profits. British Gas-owner Centrica (CNA.L) dropped 3.5% as it too reported a fall in annual earnings. Aston Martin (AML.L) surged 7.4% as investors looked past a surge in losses to focus on signs that a turnaround plan was taking root.

Anglo American (AAL.L) rallied more than 4% after beating forecasts with its full year results. The performance helped spur a broader rally for the mining sector. Rio Tinto (RIO.L), Glencore (GLEN.L), and Antofagasta (ANTO.L) all gained more than 1%.

In Brussels, AB InBev (ABI.BR) fell over 5% as it reported an 80% drop in annual profits and a 3.7% fall in sales.

After a sell-off on Wednesday, Asian stocks took a cue from Wall Street and rebounded overnight. Japan's Nikkei (^N225) rose 1.7% on Thursday, the Hong Kong Hang Seng (^HSI) rose 1.4%, South Korea's KOSPI (^KS11) jumped by 3.5%, and the Shanghai Composite (000001.SS) rallied 0.6%.

WATCH: Powell says there's a 'long way to go' to reach maximum employment