DAX, CAC, FTSE 100 – Major Indexes Supported as Less-Hawkish Fed Comments Bolster Tech Sector

The European stock markets are edging higher on Friday as investors look to claw back losses from earlier in the week. The choppy price action suggests investors are trying to navigate Fed comments from Thursday, hot European inflation data and the prospects of future rate hikes by the European Central Bank (ECB).

At 09:27 GMT, Germany’s DAX is trading 15464.34, up 136.70 or +0.89%. The UK’s FTSE 100 index is at 7973.38, up 29.34 or +0.37% and France’s CAC 40 Index is trading 7328.86, up 44.64 or +0.61%.

European Traders Keying on Fed Bostic’s Less-Hawkish Comments

Early in the session on Friday, the three major indexes were lifted by comments from Atlanta Federal Reserve President Raphael Bostic, who said he was “firmly in favor” of quarter-point hikes and that the U.S. central bank should go “slow and steady.”

In a separate speech, however, Fed Governor Christopher J. Waller rang the hawkish bell by raising the possibility of a higher terminal rate if inflation does not cool, citing January’s bumper payrolls report. These remarks may be putting a lid on the market on Friday.

Data Dependence and the ECB

Today’s price action suggests investors aren’t two rattled by hotter-than-expected readings, a dip in Euro Zone manufacturing PMI or hawkish comments from an ECB officials.

Throughout the week, inflation data from across Europe came in hotter than expected. On such report showed a flash estimate for the Euro Zone showed headline inflation eased from 8.6% to 8.5%, but this was above a consensus estimate; while core inflation rose from 5.3% to 5.6%. Meanwhile, inflation unexpectedly rose in Germany, France and Spain.

Euro Zone factory activity also failed to impress with the manufacturing PMI showing a drop from the previous month. S&P Global said it was pulled down by stocks of purchases and that production volumes across the bloc had broadly stabilized.

Finally, European Central Bank President Christine Lagarde said Thursday that getting inflation to its 2% target will still take time and that the previously signaled 50 basis point hike in March is still on the table, Reuters reported.

Tech Shares Lift European Indexes

The major European stock indexes are being lifted on Friday by rate-sensitive technology stocks. Traders said the catalyst driving prices higher are overnight comments from Atlanta Fed President Raphael Bostic, who suggested a pause in rate hikes by mid- or late-summer.

Miners also rose 1.3% as the prospects of China’s reopening shoring up demand were a theme that played out for much of the week after the country reported data that pointed to improving economic conditions.

Additionally, shares of Lufthansa jumped 4.4% after the German airliner swung to a “clearly positive result” in 2022, boosted by a strong increase in demand for air travel, Reuters reported.