The European Stock Market Rises On Fed Relief And A Rebound In Chinese Demand

Stocks rose on Friday as hopes for a measured U.S. Federal Reserve approach lifted technology stocks, while miners rose on expectations of a rebound in Chinese demand.

In early trading, the STOXX 600 (.STOXX) rose 0.7%, while rate-sensitive tech stocks (.SX8P) gained 1.4%.

Raphael Bostic of the Atlanta Fed suggested a “slow and steady” rate hike moving forward, followed by a pause by mid- or late summer.

For the next two weeks, the Federal Reserve (Fed) and European Central Bank (ECB) will meet, and U.S. jobs data will be released, while China will set its economic goals at its annual parliament session on Sunday.

After China’s economic data showed signs of improvement, mining stocks (.SXPP) rose 2.0% as prospects of China’s reopening spurred demand.

The mining index was set to rise nearly 7% this week, tracking its biggest weekly gain since May 2021, and outpacing other major sectors. The broader STOXX 600 index was set to rise 1%.

Defense plays, such as utilities, were laggards this week.

In addition to luxury stocks, Chinese reopening has benefited banks (.SX7P) and miners, including LVMH (LVMH.PA) and Kering (PRTP.PA).

Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a client note that European consumer stocks will benefit from a recovery in European and Chinese spending.

With wage growth picking up, inflation past its peak, and less hawkish central banks, disposable income will rise and consumer sentiment will improve.”

The euro zone economy is on track to avoid a recession, according to a survey showing business activity picked up last month.

Lufthansa (LHAG.DE) shares jumped 5.7% after the German airline posted a “clearly positive result” in 2022, while Volvo Car AB (VOLCARb.ST) added 3.4% as February sales rose.

Citigroup downgraded Admiral Group PLC (ADML.L) from “buy” to “neutral”.

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