(MENAFN- Mid-East Info) By Daniela Sabin Hathorn, senior market analyst at Capital

European equities are rallying on Thursday on the back of a cleaner macro mix and a friendlier policy backdrop. The momentum has been building as inflation remains close to target which allows for the ECB to stay put while growth surprises have nudged higher from last year's trough. That combination-falling real-rate pressure with fading recession risk-compresses risk premia and lifts cyclicals.

However, over the past 48 hours, European stocks have been outperforming, with the STOXX 600 reaching a new all-time high after jumping at the open. Wednesday's leg higher was healthcare led after headlines around a U.S. pricing deal reduced tail-risk for Big Pharma, with broad gains in AstraZeneca, GSK and peers. A lack of negative drivers in the macro environment in Europe also helped sentiment.

Today's follow-through has been tech- and cyclicals-driven. A global chip rally-sparked by reports that Samsung and SK Hynix will supply memory to OpenAI-pulled up European semis and equipment names and put the broader STOXX 600 at fresh highs, while autos caught a bid after a broker upgrade of Stellantis. At the same time, a notably weak ADP print stateside turbo-charged Fed cut expectations into month-end, easing rate pressure on duration-sensitive growth stocks and exporters. That mix explains why the DAX 40 has also outperformed: it's geared to software/industrial tech and autos, all of which benefited from the chip news and easier-policy narrative.

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Past performance is not a reliable indicator of future results.

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