French industrial data boosts European stocks as tech rally resumes on Wall Street

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2-min read
An employee works on French carmaker Renault assembly line at the Maubeuge factory, northern France. Photo: Francois Mori/AP
An employee works on French carmaker Renault assembly line at the Maubeuge factory, northern France. Photo: Francois Mori/AP

European stock markets rose on Wednesday, as a tech rally resumed on Wall Street and French industrial data pointed to early signs of a rebound for the eurozone economy.

The CAC 40 (^FCHI) rose 1.1% in Paris, while the DAX (^GDAXI) had gained 0.7% in Frankfurt. Both markets had started the day lower.

European stocks were supported by French industrial data that showed production rebounded by 3.3% in January. The data smashed forecasts for a 0.5% rise and reversed a decline seen in prior months. It comes on the eve of the latest European Central Bank (ECB) policy meeting on Thursday.

Adidas (ADS.DE) rallied 2.7% in Frankfurt after it said it returned to sales growth in the final quarter of 2020 and announced plans to reinstate its dividend.

The FTSE 100 (^FTSE) underperformed, closing down 1%. The UK index spent most of the session lower, dragged down by mining stocks. Russ Mould, investment director at AJ Bell, said the index was suffering from “some of the heat coming out of the recent commodities mini-boom.”

A tech rally on Wall Street resumed when trading got underway in New York. The Nasdaq (^IXIC) was up 0.6% by the time Europe closed, extending strong gains seen on Tuesday. The S&P 500 (^GSPC) was up 0.8% and Dow Jones Industrial Average (^DJI) was 1.2% higher.

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US stocks were supported by inflation figures that were in-line with forecasts. Fresh inflation data published on Wednesday showed prices in the US grew by 0.4% in February month-to-month. Inflation was 1.7% on an annual basis.

The data had the potential to "reinforce the concerns and qualms" that have been roiling bond and stock markets over the last few weeks, according to Avatrade's chief market analyst Naeem Aslam.

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US bond yields have spiked in recent weeks as investors have bet that stimulus will supercharge inflation and force the Federal Reserve to raise interest rates. The rise in yields has drawn money away from the stock market and into bonds. That dynamic has disrupted the rally for growth stocks that characterised most of 2020.

The in-line figures calmed fears about runaway inflation.

Sentiment was weak in Asia overnight. Japan's Nikkei (^N225) closed flat, the Hong Kong Hang Seng (^HSI) rose 0.4%, and China's Shanghai Composite (000001.SS) was flat. The KOSPI (^KS11) fell 0.6% in South Korea.

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