European stocks gained ground Wednesday, with tech shares still clawing back losses logged earlier in the week, as investors waited for confirmation from the Federal Reserve that the U.S. economy is strong enough for another interest-rate rise.
The Stoxx Europe 600 SXXP, +0.59% gained 0.5% to 390.82, with all sectors moving higher, led by the tech, industrial and utility groups. The pan-European index on Tuesday rose 0.6%, led by technology shares following Monday’s sharp selloff that had begun Friday on Wall Street.
On Wednesday, the Stoxx Europe 600 Technology Index FX8, +1.14% remained in recovery mode, rising 0.9%. The index on Monday was knocked down nearly 4%. The sector on Wednesday was keying off a rebound in U.S. tech stocks that carried major Wall Street benchmarks SPX, +0.45% DJIA, +0.44% to closing highs on Tuesday.
Meanwhile, Hexagon AB HEXAB, +11.67% rallied 16% on reports the industrial-technology company has held talks on a possible sale to a U.S. or European rival that could value Hexagon at about $20 billion.
The gains in Europe took place before the Federal Reserve releases its policy decision at 7 p.m. London time. Investors expect the Fed to raise interest rates and will listen for any signal from Chairwoman Janet Yellen that the central bank remains on course to keep raising rates.
“The same factors that will keep the Fed raising rates — economic growth and easy financial conditions — are also likely to keep supporting the stock market, which is why I am not particularly concerned about the recent pullback in tech stocks,” said Brad McMillan, chief investment officer at Commonwealth Financial Network, in a late Tuesday note.
“Why not? Tech stocks are, in aggregate, valued roughly in line with the market as a whole on both an operating earnings basis and a cyclically adjusted basis. In other words, based on what companies are earning, tech stocks are not substantially more expensive than other stocks,” he added.
The euro EURUSD, -0.0357% traded at $1.1211, on par with late Tuesday’s level. The currency pair will be in focus later Wednesday with the Fed’s policy decision.
Stock movers: Shares of Inditex SA ITX, -1.38% fell 1.1%, even as the parent of apparel retailer Zara posted a 18% rise in first-quarter net profit on higher sales.
British Prime Minister Theresa May said Tuesday she plans to start Brexit talks next week. She and her Conservative Party are working to form a new government with support from Northern Ireland’s Democratic Unionist Party. The Conservatives lost their parliamentary majority in last week’s general election.
Economic data: Eurozone industrial output rose 0.5% rose in April, a sign that a more rapid recovery has continued into the second quarter.