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European Shares Strengthen, but Tech Stocks under Pressure

European shares opened generally higher on Wednesday but world shares remained in the red after a weak Asian session, even after Fed Chair Jerome Powell pushed back against inflation fears.

Falling tech stocks pulled Asian markets lower overnight, as recent gains in U.S. Treasury yields put lofty valuations under pressure.

In his testimony before the U.S. Senate, Federal Reserve Chair Jerome Powell did not seem too worried about rising yields, telling Congress they were a statement on the markets confidence in the pandemic recovery.

The 10year U.S. Treasury yield edged back down below its recent oneyear high, although it rose as European markets opened.

Powells comments reinforce our view that the increase in inflation expectations is most likely transitory and that higher Treasury yields primarily reflect optimism over the economic recovery and the reflation trade, wrote UBS chief investment officer for global wealth management, Mark Haefele, in a note to clients.

Investors should expect an extended period in which interest rates remain below inflation.

Europes STOXX 600 rose in early trading, up 0.1 at 0843 GMT, Germanys DAX was up 0.4, but Londons FTSE 100 was down 0.7.

The MSCI world equity index, which tracks shares in 49 countries, was down 0.4, having lost 2.3 since it last hit an alltime high on Feb. 16.

U.S. futures pointed to a weaker open for Wall Street, with futures for the techheavy Nasdaq in decline for the seventh consecutive day.

Tech stocks are…

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