European equities mark weekly gain on growth sensitive sectors

European equities closed lower on Friday as bond yields rose on inflation expectations that were pushed up by strong U.S. payrolls data, although the STOXX 600 index marked a weekly gain on strength in growth-sensitive sectors.

The pan-European STOXX 600 dropped 0.8% on the day, with shares of travel and financial services firms leading losses. However, the index rose 0.9% for the week, as optimism over an eventual economic recovery this year saw investors pile into sectors most likely to benefit from a bounceback. Automobile stocks outpaced their regional peers with a 4.9% jump.

U.S. Federal Reserve Chair Jerome Powell on Thursday said the recent spike in yields did not warrant intervention by the central bank to bring them down. U.S. and European bond yields pushed higher after his statements, while U.S. yields were also supported by strongerthan-expected payrolls data, which pushed up inflation expectations.

Analyst expectations for euro zone growth are much tamer this year, with some even welcoming the rise in local bond yields as a sign of reflation.

Technology was the weakestperforming European sector for the second week in a row, while utilities and healthcare also lagged. Data showed orders for German-made goods rose by twice as much as expected in January as robust foreign demand more than offset domestic weakness. Analysts expect overseas demand to support the euro zone manufacturing sector this year.

A late rally in Chinese shares on Friday helped pull Asian stocks off one-month lows as investors picked bargains while attention shifted to U.S. nonfarm payrolls due later in the day.

Energy markets were not spared the volatility either, with oil prices adding to big gains overnight after the Organization of Petroleum Exporting Countries and its allies agreed to mostly maintain their supply cuts in April as they await a more solid recovery in demand from the COVID-19 pandemic. Oil stocks rose 0.7%, supported by crude prices rising to near 14-month highs after OPEC and its allies agreed not to increase supply in April.

This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.