European Stocks Rebound as Tech Leads the Recovery Amid Political and Economic Uncertainty

European shares staged a comeback on Thursday, buoyed by a strong performance in the tech sector, even as broader concerns about U.S. trade policy and France’s political instability lingered.

Key Highlights

1. Tech Sector Outperforms:
   • The STOXX 600 index rose by 0.6% in early trading, led by the technology sector, which surged 1.8%, marking its strongest gain in two weeks.
   • Chipmakers such as ASM International, BE Semiconductor, and ASML gained between 3% and 4.7% following reports that U.S. restrictions on China’s semiconductor industry might be less stringent than anticipated.
2. French Markets and Political Concerns:
   • France’s blue-chip CAC 40 index recovered 0.5% after hitting its lowest levels since August earlier this week.
   • Prime Minister Michel Barnier faces mounting challenges as his coalition government struggles to pass the 2025 budget, raising fears of a potential collapse in the polarized parliament.
   • French government bonds stabilized after a sharp sell-off had widened the yield spread with German bonds to levels last seen during the 2012 Eurozone debt crisis.
3. Inflation and Rate-Cut Path in Focus:
   • Markets are closely monitoring inflation data for indications of the European Central Bank’s monetary policy trajectory.
   • ECB President Christine Lagarde sought to ease fears of escalating global trade tensions, emphasizing that a trade war would be detrimental to all parties involved.
4. U.S. Market Closure:
   • With the Thanksgiving holiday in the U.S., trading volumes in European markets were relatively subdued.

While the rally in tech stocks offers a positive note, uncertainty over global trade policies and the fragile political situation in France are likely to keep market volatility elevated. Investors will continue to watch inflation trends and ECB statements for further clarity on the path of rate cuts and economic stabilization in the Eurozone.