Technology's Surge Lifts Europe's STOXX 600 Amid Economic Uncertainties

Europe's STOXX 600 saw a rise, driven by technology stocks and positive inflation data, hinting at a possible interest rate cut. Despite gains, concerns over geopolitical issues and U.S. tariffs affected investor sentiment, particularly in auto stocks. France's financial turbulence also impacted market dynamics.

Europe's STOXX 600 ended the week strong, buoyed by a tech stock rally as investors evaluated euro zone inflation report findings, considering the likelihood of a larger interest rate cut in December. The pan-European index reversed early losses, rising 0.6% to 510.25 points on Friday, marking its first monthly gain since August with a 1% rise in November. However, it had a modest 0.2% decline on a weekly basis.

The tech sector provided the most significant boost, climbing 1.6%. With low trading volumes anticipated following the Thanksgiving holiday, the U.S. equity market had a shortened trading day. Euro zone flash inflation matched forecasts at 2.3% annually in November, leading markets to anticipate over an 80% probability of a 25 basis-point cut at the European Central Bank's December 12 meeting.

Capital Economics analysts maintain that a 50 basis-point cut remains plausible, citing euro-zone economic struggles. Despite the STOXX 600's modest three-month gain, it lagged the U.S. S&P 500. Investor sentiment in Europe was dampened due to potential U.S. tariffs, French political uncertainty, and geopolitical tensions. Auto stocks suffered, and defence stocks gained due to the Russia-Ukraine conflict. France's CAC 40 faced challenges amidst political turmoil, impacting market outlook.

(With inputs from agencies.)