STOXX climbs as tech boost offsets homebuilder drag

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STOXX CLIMBS AS TECH BOOST OFFSETS, HOMEBUILDER DRAG (0829 GMT)

The STOXX 600 is 0.4% higher, so far faring better than earlier signalled by flat futures, even as Chinese data kept a slowing global economy on traders' minds.

The gains in the STOXX 600 add to Wednesday's 1.5% rally, after data showed U.S. inflation cooled more than expected in June.

Tech stocks <. SX8P> are enjoying a 1.2% lift, helped out by one of Europe's top risers today, UK IT company Softcat, whose shares are up 5.8% after a broker upgrade. European semis are also boosting tech after Jefferies said the sector has entered a new upcycle.

Watch sellers are ticking higher today, with Swiss The Swatch Group up 6.6%, spurred on by soaring shares in London-listed Watches of Switzerland, up 10.3% after some upbeat full-year 2023 results.

Constructions and materials are meanwhile the worst-off sector, but not by much, down 0.2% and weighed on by Switzerland-based chemicals company Sika which is falling 1.8% after some mixed broker signals.

UK homebuilders are not faring well, even as the UK was seen narrowly dodging a recession. Dragging the sector down is news that the housing market slowed in June, as well as Barratt Developments saying it will build around 20% fewer homes in 2024, sending shares down 5%. Taylor Wimpey is down 3.6%, and Crest Nicholson and Bellway are both down 2.5%-3.3%

(Lucy Raitano)

GLOBAL ECONOMY IN FOCUS AS EUROPEAN FUTURES SPUTTER (0640 GMT)

European stocks are heading for a fairly flat start to Thursday, as mixed economic data out of major economies stays at the forefront of market players' minds. EuroSTOXX50 and FTSE futures are rising about 0.1%.

The global economy is in focus after data showed China's exports fell the most in three years in June, slumping a worse-than-expected 12.4% year-on-year. It shows increased stress for the struggling global economy, while Chinese policymakers are facing growing pressure for stimulus measures.

Traders are still digesting softer U.S. CPI figures released on Wednesday which sparked a rally on the stock and bond markets. The STOXX 600 ended the day 1.5% higher.

Meanwhile UK GDP data on Thursday showed the British economy contracted by less than expected in May, but the housing market showed signs of a slowdown in June.

(Lucy Raitano)

UK DATA DELUGE AND THE RUN-UP TO RECESSION (0621 GMT)

A big bunch of numbers is due out of Britain today - GDP, industrial output, construction - and will call into question the Bank of England's insistence that both the economy and its banks are coping okay with its fast and furious rate rises.

Despite 13 back-to-back rate rises, Britain remains a hawkish outlier among major economies, and the BOE's task of trying to tame the highest inflation rate in the rich world, while dealing with a super-tight labour market and policy transmission lags, isn't an easy one.

Both GDP and industrial output should have contracted in May from the previous month, leaving markets smug in their view that as policy rates head toward 6%, Britain is heading for a recession.

Gilt yields have come off slightly this week as the latest inflation numbers in a string of similarly softish U.S. data leads investors to believe the Fed will be done raising rates after July. Sterling is at 15-month highs.

Wall Street and other global stock markets are rejoicing and the dollar had its worst session in five months overnight, falling more than 1% against the euro to its lowest in more than a year.

The ECB releases June policy minutes, which may not be a spoiler, given how unambiguous policymakers have been about a rate rise this month, about ending crisis-era stimulus programmes and the inflation problem.

Nor is China affecting sentiment today, even after trade numbers missed estimates and showed how badly the reopened economy is stuttering.

Key developments that could influence markets on Thursday:

ECB June meeting minutes

UK May GDP estimates, industrial production, construction

(Vidya Ranganathan)