Stock Rally Spreads as Tech Bounce Gains Momentum – Europe Market Wrap

As traders prepared for the release of the European Central Bank’s rate decision and the upcoming batch of inflation data, a tech-fueled rally that began in the US on Wednesday moved to stock markets in Asia and Europe.

Following a Wall Street stock market rally on Wednesday, led by the biggest technological companies in the world, risk appetite has returned. It was the biggest increase in over a month for the MSCI Asia Pacific Index. The European Stoxx 600 index had a 1% increase lead by ASML Holding NV, a Dutch manufacturer of semiconductor equipment.

S&P 500 futures began to advance as investors got ready for the producer price index, which is expected to indicate a modest increase in wholesale prices and serves as the second indicator of US inflation this week. Treasuries rates increased little.

The European Central Bank (ECB) plans to lower interest rates once further, bringing its deposit rate down to 3.5% by a quarter point. Even still, officials are being careful because inflation hasn’t completely disappeared.

The consumer price index on Wednesday supported the Federal Reserve’s cautious approach. Instead of placing bets on a half-point rate decrease, swap traders have fully priced in a quarter-point reduction during the Fed’s policy announcement next week.