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Europe Markets: European stocks set to break longest losing streak since early pandemic days, supported by tech rebound

European stocks were poised to break a five-session losing streak on Wednesday, led by technology stocks, while falling shares of Inditex and Hennes & Mauritz bucked an otherwise upward trend for the apparel sector.

Investors were also focused on the outcome of a Federal Reserve meeting for later, with the Bank of England and European Central Bank meetings looming for Thursday.

The Stoxx Europe 600 index
SXXP,
+0.32%

rose 0.3% to 470.92, following a 0.8% decline, which marked the fifth straight loss, the longest such streak since March 2020 when the index fell for six consecutive sessions. The German DAX
DAX,
+0.30%

rose 0.3% and the French CAC 40
PX1,
+0.63%

rose 0.5%.

The FTSE 100 index
UKX,
-0.40%

fell 0.4% against the backdrop of a stronger pound
GBPUSD,
+0.26%
,
up 0.3% to $1.3273, following the strongest rise in U.K. annual inflation in more than a decade. Driven by supply-chain woes and higher energy costs, prices rose a stronger-than-forecast 5.1% in November.

The data could weigh heavily in favor of some tightening of policy from the Bank of England’s policy-setting committee meeting on Thursday. In a bigger spotlight, the Fed’s will give the outcome of its two-day meeting on Wednesday, in which the central bank is due to announce the start of tapering and lay out plans for future interest-rate rises.

Technology stocks have been under pressure, with Nasdaq-100 futures
NQ00,
-0.30%

down again, amid the threat of higher interest rates, which can discount the current value of future earnings. As for stocks in focus, shares of ASML Holding
ASML,
-1.32%

climbed 2%, SAP
SAP,
-1.70%

SAP,
+0.92%

and Infineon shares
IFX,
+0.99%

gained more than 1%.

Markets have also been weighing up the potential hit to global growth from the omicron coronavirus variant, as countries beef up measures to combat surging cases. A study out of Hong Kong on Tuesday showed the Sinopec COVID-19 vaccine, used widely in China and the developing world, wasn’t effective in neutralizing the new coronavirus variant.

European Commission President Ursula von der Leyen said Wednesday that the contagious omicron strain would be the dominant variant in the region by January.

China economic data showed factory production climbing at a faster pace in November, but consumption and investment decelerated, which weighed on base metals prices and related stocks. Shares of miners Rio Tinto
RIO,
-2.01%

RIO,
+0.76%
,
BHP
BHP,
+0.78%

and Glencore
GLEN,
-2.11%

were down by 1% or more.

Apparel makers were also contributing to gains, though that was focused on luxury-goods makers, such as LVMH Moët Hennessy Louis Vuitton
LVMH,
+1.47%

rose 1.6%, Hermès International
RMS,
+2.63%

climbed 2%.

On the downside, shares of retailing giants Hennes & Mauritz
HM.B,
-3.06%

of Sweden and Spain’s Inditex
ITX,
-3.28%

fell more than 2% as both reported results. H&M reported fourth-quarter fiscal revenue in line with expectations, though a team of analysts at Jefferies led by James Grzinic noted uncertainties likely to follow due to the current markdown-boosted autumn and winter seasons.

Inditex saw solid top-line sales in the third quarter ending October, but gross margin fell short, due to industrywide supply-chain issues and the inflationary trend, said analyst Cédric Rossi at Bryan, Garnier & Co., in a note to clients.

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