European shares recover from tech selloff as dollar heads for weekly loss

what happened

European equity indexes gained on Friday, recovering part of the previous session's slump in technology shares. The STOXX 600 rose about 0.6%, Germany's DAX added around 1%, France's CAC 40 edged higher, and London's FTSE 100 was little changed. US index futures also pointed up, though Nasdaq contracts stayed negative over concerns about the debt loads of firms building AI data centres, such as CoreWeave.

The dollar lost 0.4%, with the dollar index hovering near 101.7, setting up its first weekly decline in three weeks. The euro rose to roughly $1.1255, moving away from a 17-month low. Lower US Treasury yields weakened the greenback, even as traders added to their bets on further Federal Reserve rate hikes after hotter-than-expected inflation data on Wednesday.

Asian markets mostly advanced. Indonesian stocks posted their steepest fall since 1998 after MSCI said the country no longer meets emerging market criteria and proposed dropping it from indexes tracked by funds. Turkey's main index also fell more than 3% after MSCI froze some changes to its Turkish indexes, according to TradingView. Brent crude traded near $105-106 a barrel, still on course for a weekly gain on Middle East supply concerns, while gold held around $4,175-4,187 an ounce.

why it matters

A weaker dollar typically supports gold and other dollar-priced commodities and makes the euro more attractive. An Indonesian exit from MSCI indexes could trigger outflows of passive investment worth billions of dollars, which matters for emerging market investors. Rate expectations and credit quality in the AI sector remain the key drivers of stock and bond moves this week.

market impact

EUR/USD and gold: weaker dollar supports prices; Indonesian equities: possible passive fund outflows weigh on the market

tags

instruments