By Peter Nurse
Investing.com - European stock markets are seen opening in a mixed fashion Wednesday, with investors growing wary of rising bond yields even amid continuing positive news surrounding the coronavirus pandemic.
At 2:10 AM ET (0710 GMT), the DAX futures contract in Germany traded 0.1% higher, CAC 40 futures in France dropped 0.1%, while the FTSE 100 futures contract in the U.K. rose 0.3%.
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. Regional leaders have however 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.
The number of virus-related deaths is falling throughout the continent, with France, for example, reporting Tuesday that its seven-day moving average of deaths fell to 381, the first time the average was below 400 since late January.
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) continued the positive week for investors in mining stocks. 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.
Earnings from rivals BHP Group (NYSE:BHP) and Glencore (OTC:GLNCY) had been received positively by the market on Tuesday.
Elsewhere, sales at fashion house Kering (PA:PRTP), 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) will also be in the spotlight Wednesday with the cigarette maker releasing its final results for 2020. U.K. officials ended a corruption investigation into the company’s Africa business last month.
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.
The deep freeze halted Texas oil wells and refineries on Monday and forced restrictions on natural gas and crude pipeline operators, resulting in blackouts throughout the state.
U.S. crude futures traded 0.4% higher at $60.30 a barrel, while the international benchmark Brent contract rose 0.5% to $63.67, both contracts having hit 13-month highs earlier this week.
U.S. crude oil supply data from the American Petroleum Institute will be released later in the session.
Elsewhere, gold futures fell 0.4% to $1,791.95/oz as the returns on bonds became more attractive, while EUR/USD traded 0.2% lower at 1.2079.