European Stocks Gain With France, US Data in Focus: Markets Wrap

Europe Rallies as Investors Eye French Politics and US Data Flood

European stock markets climbed Tuesday, buoyed by optimism surrounding US technology stocks and tentative hopes for a resolution to France’s political crisis.

Traders are closely watching political developments in Paris where Finance Minister Bruno Le Maire faces a crucial vote of no confidence Wednesday. A likely alliance between far-right leader Marine Le Pen and left-wing coalitions threatens Le Maire’s government and has weighed heavily on French assets recently. However, market sentiment seems to be improving slightly as political tensions ease.

Meanwhile, the broader European Stoxx 600 index extended its rally for a fourth consecutive day, fueled by strong gains in technology firms. This positive momentum was spurred by news that the US has implemented less severe curbs on

Chinese access to key semiconductor and artificial intelligence technology, easing fears of a complete tech decoupling. Germany’s main equity benchmark powered through the 20,000-point milestone for the first time, reflecting the broader market enthusiasm.

Across the Atlantic, US futures held steady after the benchmark S&P 500 index notched its impressive 54th record closing high of 2024. The coming week promises a jam-packed schedule of US economic data releases and speeches from Federal Reserve officials, shaping investor expectations for future interest rate decisions.

The spotlight will be on Friday’s crucial jobs report, expected to show strong hiring in November. This follows a string of encouraging economic indicators, including Thursday’s positive producer price index (PPI) data.

"The underlying momentum in the US economy is very strong," observed Luke Barrs, of Goldman Sachs Asset Management on Bloomberg Television. Broad-based growth is a good sign for equities beyond just the tech giants, he added. If this domestic growth is coupled with interest rate normalization, it could create a favorable environment for smaller capitalization stocks.

Meanwhile, Citigroup Inc. strategist highlight a trend of "short-sellers capitulating" as the S&P 500 continues its upward climb towards its best yearly performance since 2021.

Despite European stocks showing signs of life, investor sentiment in the region remains cautious, evidenced by net bearish positioning on Euro Stoxx 50 futures and accelerating ETF outflows.

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Investors are concerned over weaker economic growth prospects, dimming earnings expectations, and lingering political instability, particularly in France and Germany.

In Asia, stock markets rallied from Japan to Australia. The Refined Oil stocks rose together on Tuesday. Chinese shares also rebounded after reports that Beijing is planning a key economic planning meeting next week to map out growth targets and stimulus measures for 2025.

With global markets traversing volatile terrain, investors will be eagerly anticipating upcoming economic data releases, corporate earnings reports, and central bank pronouncements. This week’s key events include:

• Tuesday: Fed’s Adriana Kugler and Austan Goolsbee speak
• Wednesday: Eurozone S&P Global Eurozone Services PMI, PPI; US factory orders, US durable goods; Fed’s Jerome Powell and Alberto Musalem speak; Fed’s Beige Book released
• Thursday: Eurozone retail sales; US initial jobless claims; OPEC+ supply meeting
• Friday: Eurozone GDP; US jobs report, consumer sentiment

Here are some of the major market shifts observed on Tuesday:

• Stocks:

  • The European Stoxx 600 rose 0.5%
  • S&P 500 futures were little changed
  • Nasdaq 100 futures were little changed
  • Futures on the Dow Jones Industrial Average were little changed
  • The MSCI Asia Pacific Index rose 1.3%
  • The MSCI Emerging Markets Index rose 1%

• Currencies:

  • The Bloomberg Dollar Spot Index was little changed

  • The euro rose 0.2% to $1.0520

  • The Japanese yen fell 0.2% to 149.93 per dollar
  • The offshore yuan fell 0.1% to 7.2952 per dollar

• Cryptocurrencies:

  • Bitcoin fell 0.2% to $95,252.46

  • Ether fell 0.2% to $3,608.33

• Bonds:

  • The yield on 10-year Treasuries advanced three basis points to 4.22%

  • Germany’s 10-year yield advanced three basis points to 2.06%
  • Britain’s 10-year yield advanced two basis points to 4.23%

• Commodities:

  • Brent crude rose 1% to $72.58 a barrel
  • Spot gold rose 0.2% to $2,645.35 an ounce

  This news article was prepared using Bloomberg Automation’s assistance.

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