European shares rallied on Thursday as better-than-expected U.S. economic data helped ease fears of an economic slowdown. The positive U.S. retail sales and jobless claims data provided a boost to investor sentiment leading to gains in European stocks. The pan-European STOXX 600 index rose 0.6% with most major sectors in positive territory.
U.S. retail sales unexpectedly rose by 0.7% in July signaling strong consumer spending despite concerns over rising inflation and the Delta variant's impact on the economy. Additionally the number of Americans filing new claims for unemployment benefits fell to a pandemic-era low further boosting market confidence.
In Europe the technology sector outperformed other sectors with shares in chipmaker ASML Holding N.V. hitting a record high after the company announced a $5.41 billion share buyback plan. The strong performance of tech stocks contributed to the overall rally in European markets.
Furthermore positive corporate earnings reports from German software company SAP and French luxury goods group Kering added to the upbeat market sentiment. SAP shares jumped 4.1% after the company raised its revenue and profit outlook for the year. Kering shares also gained 2.7% following strong sales of its luxury brands including Gucci and Saint Laurent.
The positive mood in European markets extended to other global markets as well. Asian shares advanced with Japan's Nikkei reaching its highest level since January. U.S. stock futures also pointed to a higher open indicating that the positive sentiment could continue in the American markets.
Investors are closely monitoring the developments in the global economy particularly the impact of the Delta variant and central banks' strategies to address inflationary pressures. The European Central Bank (ECB) recently announced a new strategy that will tolerate inflation above its 2% target signaling a dovish stance. This move is expected to support the economic recovery and boost investor confidence in the region.
In terms of individual stocks shares of Zalando Europe's biggest online fashion retailer surged 9.6% after reporting strong second-quarter results and raising its full-year outlook. The company benefited from the increasing shift towards online shopping during the pandemic.
On the downside UK homebuilder Taylor Wimpey fell 5.6% after its half-year profits declined due to rising costs and supply chain disruptions. The company also highlighted concerns over labor availability and material shortages.
Overall the positive U.S. economic data and strong corporate earnings reports contributed to the rally in European markets. The technology sector in particular stood out as investors reacted positively to ASML Holding N.V.'s buyback plan. As global economic concerns persist investors will continue to closely monitor the latest developments and central bank actions.
