European equities climb on Chinese stimulus hopes; inflation data in focus –

  • STOXX 600 set for muted quarter, eyes monthly gains
  • Energy, real estate among top winners
  • US PCE data, Eurozone inflation figures in focus
  • ASML drops the Dutch government’s export restrictions

June 30 (Reuters) – European stocks rose on Friday after lackluster data on Chinese manufacturing activity fueled hopes of more policy stimulus as investors waited for key inflation readings for more clues on the direction of global interest rates.

The pan-European STOXX 600 index (.STOXX) rose 0.7% at 0825 GMT.

The index was set for subdued returns at the end of the quarter, with growing signs of China’s weak recovery from the COVID-19 crisis and concerns over continued higher global interest rates, which stalled a rally in equities that started early this year had brought.

Banks (.SX7P) are the biggest gainers among major European sectors this quarter, up 6%, while miners were a major drag, down 9%, as concerns about China’s top metal consumer weighed heavily on metal prices.

On a monthly basis, the index is on track for gains of 1.7% after sharp declines in May, having gained 8% in the first six months of the year.

Reuters chart

Reuters chart

Investors are now awaiting US personal consumption expenditure (PCE) data for May and preliminary eurozone inflation data later today, after recent aggressive signals from major central bankers bolstered expectations of more rate hikes ahead.

A string of solid US data, including on the labor market, has raised bets that the Fed will have to do more to curb inflation.

“The general message from central bankers is that the battle against inflation is not over,” said Hubert de Barochez, a market economist at Capital Economics.

“Investors may not be as afraid of it as we are, but despite the recent data, growth will be disappointing in the second half of the year and we expect a recession in the US.”

Among European sectors, mining companies (.SXPP) gained 0.8%, with metal prices higher followed as a decline in Chinese factory activity raised expectations of more economic stimulus from the country.

Energy companies (.SXEP) were the biggest sector gainers, up 1.2%, boosted by solid crude oil prices.

The real estate sector (.SX86P) rose 0.4%, supported by 3.9% gains in shares of LEG Immobilien (LEGn.DE) after the German company raised its 2023 outlook.

On the other hand, new rules from the Dutch government restricting exports of certain advanced semiconductor equipment weighed on chipmaker shares, with ASML (ASML.AS), Europe’s largest technology company, falling 2.4%.

German unemployment rose more than expected in June, while French inflation eased this month, data showed on Friday.

Shares in Adidas (ADSGn.DE) and Puma (PUMG.DE), which had previously fallen on Nike’s (NKE.N) gloomy forecast, reversed course, rising 1.8% and 2.0% respectively.

Reporting by Amruta Khandekar in Bengaluru and Matteo Allievi in ​​Gdansk; Edited by Varun HK and Eileen Soreng

Our Standards: The Thomson Reuters Principles of Trust.

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