Europe: Tech stocks spark market rebound; inflation data looms
TECH stocks spearheaded a rebound in European shares on Thursday, after a two-day slump fuelled by worries over potential US tariffs and France’s economic and political challenges, with investors now closely watching inflation reports for clues on the future trajectory of interest rate cuts.
The pan-European Stoxx 600 index was up 0.46 per cent to 507.3 points. Trading volumes were expected to be light with the US market shut for Thanksgiving holiday.
The tech sector climbed nearly 1 per cent, logging its best day in one week, as chip stocks gained after Bloomberg reported the US administration’s China chip curbs could be less severe than expected.
Shares of ASM International, BE Semiconductor and ASML gained between 2 per cent and 2.5 per cent.
France’s blue-chip index also regained some lost momentum, gaining 0.5 per cent, after sliding to August lows in the previous session.
Defence stocks led sectoral gains, boosted by a 4.1 per cent jump in Airbus.
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Sentiment eased after European Central Bank President Christine Lagarde told the Financial Times a global trade war would be “in nobody’s interest”.
French government bonds held steady after Wednesday’s sell-off drove the risk premium over German bonds to its highest point since the 2012 debt crisis.
French Prime Minister Michel Barnier’s government faces an uncertain future, as his struggle in securing approval for the 2025 budget in a polarized parliament make it increasingly likely that his fragile coalition will collapse.
“We don’t think (Marine) Le Pen (leader of far-right National Rally party) will follow up on her threats to topple the government in the near term, but it does remind markets of the precarious situation the country is in,” said Michiel Tukker, senior European rates strategist at ING.
The banking sector also provided some support to the Stoxx 600. It gained 0.9 per cent.
Inflation in Germany, Europe’s largest economy, remained flat in November at 2.4 per cent, while rising in several German states. Spain’s November headline inflation met expectations.
Inflation figures for the euro zone, France and Italy are set to be released on Friday.
These reports follow stubbornly strong US inflation data, which raised concerns that the Federal Reserve might take a cautious approach to policy easing.
Shares of Direct Line Insurance soared 41.4 per cent after the insurer rejected a £3.28-billion-(S$5.6 billion) takeover offer from bigger rival Aviva, whose shares were down 2.3 per cent.
On the other hand, Grifols fell 11.8 per cent, extending losses to the second session, after Canadian fund Brookfield dropped its takeover plans. REUTERS
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