What’s going on here?

European markets rallied, with the STOXX 600 index climbing 0.6%, as tech stocks buoyed by positive chip export news from the US helped alleviate earlier concerns over French political instability and potential tariffs.

What does this mean?

European tech stocks saw a significant lift, increasing by 1.85%, following reports that US restrictions on chip exports to China would be less restrictive than anticipated. This news particularly benefited semiconductor firms such as ASM International, BE Semiconductor, and ASML, each enjoying roughly 4% gains. Meanwhile, France’s CAC 40 index rebounded by 0.5% from previous lows despite ongoing political uncertainty, with concerns over budget disagreements threatening government stability. In Spain, inflation rose to 2.4% in November, aligning with forecasts. All eyes are now on Germany’s upcoming inflation data to gauge its impact on the European Central Bank’s interest rate strategies, especially after the US posted strong inflation figures that might influence the Federal Reserve’s policies. Light trading volumes in Europe are expected due to the US Thanksgiving holiday, while in the UK, Direct Line Insurance surged over 36% following its rejection of a takeover bid from Aviva.

Why should I care?

For markets: Tech optimism dims political shadows.

European markets found their footing as tech shares counterbalanced worries stemming from France’s political turbulence and potential US tariffs. With semiconductors rebounding thanks to fewer US trade restrictions than feared, investor confidence in the sector grew.

The bigger picture: Inflation whispers shape future policies.

Spain’s inflation hit expectations, but upcoming German data is crucial for the ECB’s rate-path decisions amid persistent inflation in the US raising speculation about the Federal Reserve’s next moves. These factors, intertwined with geopolitical dynamics, will shape monetary strategies across Europe and beyond.