European stocks extended their gains on Thursday, as optimism surrounding the Federal Reserve’s stance on inflation and robust performance in the technology sector outweighed weak trade data from China. Investors remained focused on central banks’ monetary policies, which continued to shape market sentiment. Additionally, miners and energy firms experienced positive momentum, benefiting from a weaker dollar and a surge in commodity prices.

The pan-European STOXX 600 index maintained its upward trajectory, notching its fifth consecutive day of gains. Rising by 0.4% at 8:35 GMT, the index reflected growing optimism that the Federal Reserve may conclude its rate hikes soon after July, following a faster-than-expected slowdown in U.S. consumer inflation. This positive sentiment propelled the benchmark to its most substantial percentage increase since early June.

Investors found solace in the potential for peak interest rates, leading to a significant decline in eurozone government bond yields. While market participants still anticipate a 25-basis point rate hike by the Fed later this month, the prospects of a more gradual monetary policy trajectory generated optimism among investors.

In contrast, the release of trade data from China presented a mixed picture of the country’s economic recovery. The report revealed a contraction in exports in June at the sharpest pace since the onset of the COVID-19 pandemic, accompanied by a decline in imports. However, investors remained focused on central banks’ actions and their impact on the global economy, resulting in a relatively muted reaction to the Chinese data.

Industrial stocks, which are typically sensitive to China-related news, registered losses, with Schneider Electric experiencing a 2.0% decline. However, the technology sector emerged as the top performer on the STOXX 600, with IT provider Softcat leading the way with a 5.6% surge in its shares after receiving a “buy” rating from Citi.

Miners and energy firms also benefited from positive market sentiment, rising by 1% and 0.7%, respectively. Their gains were fueled by a weaker dollar and a boost in commodity prices, signaling renewed investor interest in the sector.

Meanwhile, London’s FTSE 100 edged 0.2% higher after a cautious start. The British economy’s contraction in May was less severe than anticipated, allaying concerns of an imminent recession.

In individual stock news, Barratt Developments, the largest homebuilder in Britain, experienced a 4.7% drop in its shares after issuing a warning of significantly reduced home construction in the current fiscal year. This news dampened investor sentiment toward the company’s prospects.

However, it wasn’t all negative news. Swatch, the renowned watchmaker, saw its shares soar by 6.6% after reporting record growth in the first half of the year. This positive performance instilled confidence in the luxury goods industry and boosted investor sentiment.

As the final ruling in the SEC vs. Ripple lawsuit looms, BitBuy, a regulated crypto marketplace in Canada, quietly reintroduced XRP, adding to the growing optimism surrounding cryptocurrencies. This move signifies a step toward restoring trust in the crypto custody industry, which plays a critical role in safeguarding users’ digital assets.

Overall, despite the weak trade data from China, European stocks demonstrated resilience, driven by optimism surrounding the Federal Reserve’s stance on inflation and strong performance in the technology sector. Investors remained attentive to central banks’ monetary policies, which continued to influence market sentiment and shape the trajectory of the global economy. Additionally, miners and energy firms capitalized on a weaker dollar and rising commodity prices, further supporting the positive market sentiment.