European Stocks Rally as Solid China Data Adds to Post-ECB Gains

European stocks rallied, adding to their post-ECB gains, as better-than-expected Chinese economic data boosted sentiment.

(Bloomberg) — European stocks rallied, adding to their post-ECB gains, as better-than-expected Chinese economic data boosted sentiment.

The Stoxx 600 Index was up 0.2% at the close in London, driven by gains across luxury and mining stocks as data showed China’s industrial production and retail sales growth jumped last month. The main regional index is up 1.6% this week, the biggest weekly advance in two months, amid positive signs from China.

Among individual movers on Friday, H&M fell after revenue growth unexpectedly ground to a halt, while Games Workshop Group Plc soared after the table-top games maker said that recent trading was ahead of its expectations. ASML Holding NV and other chip-equipment stocks dropped after Reuters reported that TSMC asked its major suppliers to delay shipment of high-end chipmaking equipment.

Chinese authorities also increased economic support this week aimed at stimulating the crucial construction and property industries, helping metals to surge. That in turn boosted mining stocks, which have been at the forefront of Europe’s bounce this week after a slow start to the month.

“The ECB confirmed overall expectations of a peak in interest rates so it’s true that the markets are in a little more favorable configuration”, said Vincent Juvyns, global market strategist at JPMorgan Asset Management, noting the better-than-expected data in China. 

What’s more, signals that the ECB is probably done raising rates in this cycle also helped sentiment. Focus will turn next week to the Federal Reserve, which is expected to hold rates steady.

“Markets have received the ECB message in a very positive way, pricing in this will be the last hike, while uncertainty now opens on when the cuts will start and there could be volatility around that,” said María Torres, a fund manager at MAPFRE AM. 

Volatility may be higher Friday as derivatives contracts tied to stocks, index options and futures are scheduled to mature in a quarterly episode known as triple witching.

Read more: A $4 Trillion Triple Witching Event Endangers Stock Market Calm

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–With assistance from Julien Ponthus and Kit Rees.

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