European stock markets mixed as China inflation spikes higher spooking traders

The  Dow Jones Industrial Average opened higher by 0.3% or 90 points and the  Nasdaq Composite declined 0.3% as global inflation data helped push bond yields higher, while the S&P 500  advanced 0.1%.

After closing at 1.63%, the 10-year Treasury yield increased to 1.67% on Thursday, as producer prices rose globally. China’s PPI, economists expected 3.5% but it rose to 4.4%. In the U.S., PPI climbed 1% in March, a quicker increase than the 0.5% expectations of economists.

Thursday’s early session saw tech stocks underperforming, as higher yields reduce the value of future cash flows, and growth of companies, many of which are in the technology space are expected to see several profits come further in the future. The Nasdaq closed just 1.9% lower than its all-time high on Thursday, while the S&P 500 closed at a new record and the Dow closed less than 0.1% below record levels.

The China CSI 300 index and Hang Seng dropped 1% each. Data showed consumer prices climbed by 0.4 per cent due to fuel hikes on the year in March, at the same time factory prices jumped to a more than two-year high. The Stoxx Europe 600 index was holding near a record high, but trading flat.

While China has enjoyed a strong bounce back from the Covid-19 pandemic, investors are conscious that global inflation could spread from China and compel central banks to take action at some point, possibly interest rate gains. Higher rates incline to impact negatively on stock prices.

President Joe Biden’s administration on Thursday said that seven Chinese supercomputer companies are added to a U.S. export blacklist. This may result in Geopolitical tensions.

European economic data showed unexpected drops in industrial production for both France and Germany amid restrictions on movements in those countries that are trying to curb Covid-19 cases.

After the Japanese conglomerate’s Sony Pictures unit signed an exclusive movie distribution deal with Netflix, the shares of Sony rose 1.7% higher in Tokyo.

U.S.-listed shares of Credit Suisse  (CS) stock fell 3% after Morgan Stanley lowered the shares to Equal Weight from Overweight.