European stocks rose on Thursday after a significant slide, reassuring investors following concerns over geopolitical tensions in the Middle East. Despite worries about the impact of these tensions, strong gains in the luxury sector and encouraging economic data underpinned the rebound.
Danni Hewson, head of financial analysis at AJ Bell, suggested that the market sell-off might have been a knee-jerk reaction among investors before they took time to digest the information. The concerns surrounding UK inflation and disappointing economic growth figures from China agitated the market at first, but later, the positive performance of the luxury sector and the expectation of delayed interest rate cuts helped to offset the worries.
The FTSE 100, CAC, and the Frankfurt DAX managed to recover some of their losses, with the FTSE 100 closing 0.3% higher at 7,465 points, the CAC gaining 1.2% in Paris, and the Frankfurt DAX advancing 0.7%. The uneven sectorial performances did not hinder the overall recovery.
The European stock markets traded marginally higher on Thursday, showing steadiness after the sharp losses of the previous session. However, the gains are expected to be limited due to doubts surrounding early interest rate cuts. The CAC 40 in France traded up 0.2%, the FTSE 100 in the U.K. rose 0.1%, and the DAX index in Germany traded largely unchanged.
Expectations of early interest rate cuts were dampened further by strong retail sales data in the U.S. and hawkish comments by several Federal Reserve speakers. In Europe, European Central Bank President Christine Lagarde reiterated the caution surrounding early rate cuts, emphasizing the need for a retreat in inflation before any policy changes.
Overall, the rebound in the European stocks following geopolitical tensions and the positive performance in the luxury sector, coupled with the reassurances from central bank officials, have reinstated some confidence among investors in the midst of current uncertainties.
