European markets dip slightly after Wall Street sell-off

LONDON — European stocks were slightly lower Wednesday as global markets take a downturn after a sell-off on Wall Street on Tuesday, prompted by rising bond yields and worse-than-expected earnings.

The pan-European Stoxx 600 dropped 0.1% in early trade, with food and beverages shedding 0.7% to lead losses while retail stocks jumped 1.7%.

The cautious trade in Europe comes after a sell-off on Wall Street triggered by surging bond yields sent global markets lower in the previous trading session.

U.S. bond yields continued their year-to-date climb on Tuesday with the 10-year Treasury topping 1.87%, its highest level in 2 years. The 10-year yield started the year around 1.5%. Meanwhile, the 2-year rate — which reflects short-term interest rate expectations — topped 1% for the first time in two years. Bond yields move inversely to prices.

Investors remain jittery over the U.S. Federal Reserve’s schedule for hiking interest rates and tightening its ultra-loose pandemic-era monetary policy.

Major U.S. averages also fell sharply Tuesday after Goldman Sachs missed analysts’ expectations for its fourth-quarter earnings. Big bank earnings continue on Wednesday with reports from Bank of America and Morgan Stanley slated before U.S. trading starts.

U.S. stock futures were steady in overnight trading while Asia-Pacific markets fell on Wednesday following the sell-off on Wall Street.

Earnings in Europe came from Richemont, WH Smith, JD Wetherspoon and Burberry on Wednesday.

The U.K. inflation rate soared to a 30-year high in December, the Office for National Statistics said Wednesday, as higher energy costs, resurgent demand and supply chain issues continued to drive up consumer prices.

Inflation hit an annual 5.4%, its highest since March 1992 and up from 5.1% in November, itself a decade high. Economists polled by Reuters had expected an increase of 5.2%.

— CNBC’s Maggie Fitzgerald contributed to this market report.