European stocks rise after overnight tech rally on Wall Street

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European stocks rose in early trade on Wednesday ahead of a public gathering of central bankers, as investors took heart from a tech-led rally overnight on Wall Street.

The pan-European Stoxx 600 added 0.5 per cent, extending gains from the previous day, while France’s Cac 40 gained 0.6 per cent in the first hour of trade. Germany’s Dax advanced 0.6 per cent. 

The moves came a day after the benchmark S&P 500 closed higher and the tech-focused Nasdaq Composite registered its biggest daily gain in a month. The indices were boosted by fresh manufacturing and consumer confidence data that pointed to continued economic growth in the US economy, even after a year of rising interest rates. The Stoxx Europe 600 technology index rose 0.9 per cent.

Yet investors remained cautious, at the prospect of the US Federal Reserve tightening policy further, with the central bank’s latest guidance suggesting that the benchmark federal funds rate will go up twice more before the end of the year. 

Traders prepared for Fed chair Jay Powell to attend a policy panel alongside central bankers from Europe and the UK, at a European Central Bank forum in Portugal later on Wednesday. 

A day earlier, ECB president Christine Lagarde had also signalled that policymakers were ready to continue lifting eurozone interest rates this year to combat inflation, raising concerns that high borrowing costs will soon start to weigh on the economy. 

Germany’s closely watched consumer confidence index forecast for July slipped below analyst expectations, down to minus 25.4 from minus 24.4 in the previous month, according to a report by research group GfK on Wednesday. 

Meanwhile, US futures slipped, with contracts tracking Wall Street’s benchmark S&P 500 falling 0.2 per cent, while those tracking the Nasdaq 100 lost 0.4 per cent ahead of the New York open.

Australia’s S&P/ASX 200 index rose 1.1 per cent, after official data showed that inflation cooled at a faster rate than expected in May, raising the prospect of a pause in interest rate rises from the Reserve Bank of Australia. 

Trading was mixed elsewhere in Asia, with China’s CSI 300 falling 0.1 per cent while Hong Kong’s Hang Seng added 0.2 per cent. Japan’s Topix added 2 per cent, lifted by strong gains in the technology sector.