(Reuters):European shares climbed on Friday as investors wagered that the United States Federal Reserve will take a more measured approach to future rate increases, lifting technology companies, while miners jumped on increasing expectations of a Chinese demand revival.
The STOXX 600 index gained 0.7% in early trading, with rate-sensitive tech companies up 1.4%.
Overnight, Atlanta Fed President Raphael Bostic advocated for a “slow and steady” rate increase in the coming months, followed by a halt by mid- or late-summer.
The Federal Reserve (Fed) and the European Central Bank (ECB) will hold policy meetings in the coming two weeks, and US jobs statistics will be released, while China’s yearly parliament session will be held on Sunday, when Beijing will establish its economic objectives for the year.
Mining equities gained 2.0% as chances of China’s reopening boosted demand. This was a motif that played out for much of the week after the country’s data indicated that economic conditions were better.
This week, the mining index was expected to increase nearly 7%, marking its biggest weekly gain since May 2021 and outperforming other key industries. The wider STOXX 600 benchmark was expected to rise 1% this week.
Defense bets such as energy, real estate, and healthcare were laggards this week.
The reopening of China has also been critical for prestige companies, such as LVMH and Kering (EPA:PRTP), which have propelled much of the year’s advances for European markets, along with banks and mining.
“European consumer equities are poised to profit from a rebound in European and Chinese purchasing,” UBS Global Wealth Management’s chief investment officer Mark Haefele wrote in a client memo.
“With wage growth beginning to speed up, inflation having passed its peak, and central banks becoming less hawkish, we anticipate disposable income to increase and consumer mood to improve.”
A poll found that the rebound in eurozone business activity accelerated last month, adding to the evidence that the economy will escape a recession.
Lufthansa shares rose 5.7% to the top of the STOXX 600 after the German airline reported a “clearly good outcome” in 2022, while Volvo Car AB gained 3.4% as sales increased in February.