European Shares on Track to Extend Tech-Led Gains: Markets Wrap

(Bloomberg) — European stocks look poised to carry over a strong Asian session, following Wall Street’s tech-led gains and as new US curbs on Chinese access to vital chip and AI components proved to be less punitive than feared.

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The Euro Stoxx 50 futures rose 0.4%, with their US peers flat. In Asia, equity benchmarks increased in markets from Japan to Australia. Chinese stocks also reversed earlier losses after news that the country’s top leaders plan to start a key annual economic work conference next Wednesday to map out growth targets and stimulus plans for 2025.

The generally positive tone for Asian equities came as investors breathed a sigh of relief that the Biden administration’s fresh restrictions on tech exports to China fell short of earlier proposals that would have sanctioned more key Chinese firms. That said, sentiment remains fragile toward the world’s No. 2 economy, with the yuan falling to a one-year low against the dollar on concerns about a weak economy and heightened tensions with the US.

The upcoming Central Economic Work Conference will likely dominate traders’ attention after disappointment with Chinese leaders’ recent decision to skip releasing another key meeting’s readout that many had hoped to receive new policy signals from.

“Asian markets are showing divergence, with China underperforming,” said Charu Chanana, chief investment strategist at Saxo Markets. “This trend suggests that ex-China Asian economies might face limited headwinds from US chip curbs, while benefiting from the tailwinds of a robust US economy and global central bank easing.”

The dollar edged higher in Asian trade. It snapped a three-day losing streak Monday after President-elect Donald Trump’s warning to BRICS nations. The euro was largely steady after falling as much as 1.1% in the previous session amid the political turmoil in France, where bonds and stocks came under renewed pressure.

More broadly, traders are bracing for a barrage of economic data and remarks from Federal Reserve speakers that will help shape the outlook for interest rates. The highlights this week include Friday’s payrolls report, which is expected to show US hiring jumped in November, as well as Federal Reserve Chair Jerome Powell’s scheduled participation in a moderated discussion on Wednesday.

“This week is the last truly important economic data week of 2024,” said Tom Essaye at The Sevens Report. “If results are ‘Goldilocks,’ then investors will expect a soft landing and a December rate cut.”

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