Expectations of a "soft landing" in the United States are heating up, driving European stocks towards their largest weekly gain since May

According to the information obtained from the Zhitong Finance and Economics APP, the European stock market continued to rise after the opening, with the potential to achieve the largest single-week increase in three months. This is mainly due to the significant easing of concerns about a US economic recession, the market refocusing on a "soft landing" of the US economy, the temporary end of the yen carry trade turmoil, which has led to a renewed flow of global funds into risky assets such as stocks. Traders are generally betting that the Federal Reserve will start an interest rate cut cycle next month.

As of the time of writing, the benchmark stock index of the European stock market—Stoxx Europe 600 Index—rose by 0.3%, with all 20 sub-sectors seeing gains. Among them, automotive stocks and technology stocks closely related to AI saw the largest increases, with tech giants such as ASML, SAP, and ASM International recording strong gains. The Italian stock market resumed trading after the Thursday holiday, with the FTSE MIB index rising by 2.0%, outperforming most stock benchmark indices in the European region.

Among the many individual stocks in the European market, German pharmaceutical and agrochemical giant Bayer AG saw a significant 5.2% increase in its stock price after a major victory in a long-term anti-cancer lawsuit in the United States.

This week, economic data boosting expectations of a "soft landing" of the US economy, including strong US retail sales and easing inflation, as well as economic growth rebounds in Japan and the UK, have lifted market sentiment. Major benchmark indices in various European regions, including Germany's DAX30 and the UK's FTSE 100 index, have seen significant increases this week, with the current upward trend reaching the largest increase since mid-May.

After the unexpectedly high July unemployment rate triggered the "Sam rule," expectations of a US economic recession have risen sharply, putting the possibility of a 50 basis point rate cut by the Federal Reserve in September on the table. However, with recent relatively optimistic initial jobless claims data and continued mild cooling of inflation, coupled with better-than-expected growth in July retail sales, it is evident that consumers still have resilience even in the face of high prices and borrowing costs. The resilience of consumer spending will undoubtedly strongly drive the giant ship of the US economy to continue sailing far, as 70%-80% of the components of the US GDP are closely related to consumption. Therefore, traders are currently generally betting that a 25 basis point rate cut in September is the most likely, and the "soft landing" of the US economy is back in focus.

The recent rise in expectations of a "soft landing" has also stimulated a rebound in US tech stocks, with tech stocks such as NVIDIA, Broadcom, and AMD benefiting from the AI boom seeing significant rebounds recently. In Asia, the Japanese and South Korean stock markets, which experienced a sharp decline in early August known as "Black Monday," have also rebounded across the board. The Nikkei 225 index closed up 3.77% at 38,109.80 points, with a nearly 9% cumulative increase for the week, while the KOSPI in Seoul rose by 2% to 2,696.17, reclaiming all lost ground since the decline on August 5th Guillermo Hernandez Samperay, trading director at asset management company MPPM, said: "After the negative shock waves of last week were absorbed by the market, it is easy to please the market with appropriate optimistic economic data. These shock waves are actually caused by a part of the market itself." "The disclosure time in September is approaching, but the Federal Reserve should not bear too much pressure from the market to cut interest rates, and should be cautious about whether to relax policies too quickly."