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Europe Markets: European stocks hit fresh record ahead of inflation data and Biden’s budget

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European stocks hit a fresh record high on Friday, boosted by economic data and tracking gains on Wall Street as investors waited for U.S. inflation data.

Friday’s session saw the Stoxx Europe 600
SXXP,
+0.54%

rise 0.5% to 448.52, reaching a fresh intraday record of 448.55, after Thursday’s modestly higher finish that sent it to a record close of 446.44. For the month so far, the index is up 2.5%. The German DAX
DAX,
+0.59%

and the French CAC 40
PX1,
+0.67%

indexes rose 0.5%, and the FTSE 100
UKX,
+0.29%

gained 0.2%. London markets will be closed on Monday for a holiday.

The Nikkei 225 index
NIK,
+2.10%

closed up 2.1%, though Chinese stocks
000300,
-0.32%

fell 0.3%. U.S. stock futures
ES00,
+0.39%

were higher, led by a 168-point gain for Dow futures
YM00,
+0.50%
.
Equities finished mostly higher on Thursday, boosted by positive economic data.

Investors are waiting for an update on the personal-consumption expenditures price index, the Federal Reserve’s preferred gauge of inflation. Investors are concerned that persistent price pressures could prompt the Fed to pull back on its accommodative policy, despite reassurances from the central bank that it is in no hurry to do that.

But as inflationary pressures “bubble under the surface,” investors have been trying to prepare for all eventualities, flipping into value stocks that are geared at economic recoveries and out of growth stocks, said Richard Hunter, head of markets at Interactive Investor, in a note to clients.

“The renewed consideration of cyclical stocks as an investment destination has generally played into the hands of the FTSE 100, which has now risen by 9% in the year to date. The index is replete with sectors falling into the recovery category, such as the banks, oils and miners,” said Hunter.

Also in focus, President Joe Biden is expected on Friday to propose a $6 trillion budget for the coming fiscal year that would boost spending on infrastructure, education, healthcare and social services.

U.S. markets will be closed on Monday for the Memorial Day holiday, which also marks the start of traditional summer vacations.

European stocks were lifted by data showing eurozone business and household confidence increased again sharply in May, rising above its pre-COVID-19 pandemic level for the second consecutive month.

Among European stocks on the move, shares of banking giant HSBC
HSBC,
+1.36%

HSBA,
+1.57%

climbed more than 2%, with industrial conglomerate Siemens
SIE,
+3.23%

jumping nearly 4%. Shares of airline manufacturer Airbus
AIR,
+2.57%

rose 2.6%.

Read: U.S. investors are pouring money into European stock funds

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