Investing.com – European equities traded higher for the first time this week on Thursday, as a sharp retreat in prices to levels seen before the recent Middle East conflict soothed inflation anxieties and promptied investors to pare back bets on aggressive interest rate hikes by the European Central Bank.
gained 1.5% to $74.99, while WTI rose 1.8% to $71.58.
The pan-European STOXX 600 gained 0.8%, while Germany’s rose 1.1%. France’s was up 0.6% while Italy’s gained 0.3%. London’s closed 0.7% higher.
The unwinding is coming off the back of the ECB’s 25-basis-point interest rate hike earlier this month to curb energy-driven inflation, and the swift decline in crude is leading money markets to re-evaluate the central bank’s trajectory.
That boosted rate-sensitive sectors like technology and real estate, which have faced headwinds from higher monetary policy expectations.
Europe’s benchmark indices have largely sat out the record-breaking global rally seen in recent months, routinely hampered by a traditional, old-economy sector mix that lacks the heavyweight artificial intelligence and technology engines powering Wall Street and Asian markets to historic highs.
While the drop in energy costs injected broader optimism into the market, the slide in crude prices simultaneously acted as a major drag on the index’s heavy-weight commodity sectors.
The pan-European STOXX 600 features a heavy concentration of energy giants, whose share prices trade in lock-step with crude.
The continued sell-off in oil could further downward pressure on these index heavyweights, capping the broader market’s upside potential even as other sectors cheer the relief.
A handful of tech stocks such as and gained 5% and 4% respectively, while gained 3.5%, after stellar earnings from U.S. chipmaker Micron Technology overnight soothed sector nerves over stretched valuations.