European stocks rebounded from two days of losses, with technology shares leading the charge as optimism grows over potential easing of U.S. restrictions on chip equipment sales to China. The pan-European Stoxx 600 index rose by 0.5%, marking a significant recovery for tech stocks, which experienced their best performance in two weeks.
Recent reports suggest that the U.S. may implement lighter-than-expected curbs on semiconductor and AI memory chip sales to China, alleviating some market fears. As a result, U.S. equity futures saw a slight uptick, although trading was muted due to the Thanksgiving holiday.
In contrast, yields on benchmark French bonds have risen amid concerns over a budget standoff that could threaten the government’s stability. The yield on 10-year French notes climbed to 3.03%, matching that of Greek bonds, which have only recently emerged from junk status. This political uncertainty is contributing to a challenging environment for French stocks, which are poised for their worst relative performance against European peers since 2010.
Meanwhile, Asian markets faced declines, particularly in China, as traders awaited further stimulus measures from policymakers ahead of the upcoming Central Economic Work Conference, which typically outlines key economic strategies for the following year. Despite some optimism regarding potential support from Beijing, investor sentiment remains cautious due to ongoing trade tensions with the U.S.
On the monetary policy front, recent data indicating a rise in underlying inflation has led traders to anticipate a gradual approach to interest rate cuts by the Federal Reserve. The prospect of Donald Trump’s administration picks is also influencing market expectations regarding inflation and economic policy.
In Japan, the yen weakened after a brief rally as speculation grows that the Bank of Japan may raise interest rates in its upcoming meeting. The Japanese government is expected to approve a substantial extra budget aimed at stimulating the economy.
As we look ahead, key events this week include Eurozone consumer confidence data and the release of Eurozone inflation figures on Friday. Additionally, “Black Friday” marks the beginning of the U.S. holiday shopping season, which could have significant implications for retail stocks.
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