[BENGALURU] European shares closed higher on Thursday (Nov 20) after artificial intelligence (AI) bellwether Nvidia’s results quelled concerns around an AI bubble, but pared earlier gains as uncertainty over the US monetary policy path weighed on investor sentiment.
The pan-European Stoxx 600 ended up 0.4 per cent at 563.94 points. Other major regional indexes also gained, with those in Germany and France up 0.5 and 0.3 per cent, respectively.
Chip designer Nvidia’s blowout quarterly results and positive outlook came at a crucial time for investors, who have been rattled in recent weeks by fears of an AI bubble.
“What makes us excited about the tech sector and Nvidia is that the demand for AI is still bigger than the supply. So that kind of capex span that the market is somewhat worried about is still there,” said Marija Veitmane, head of equity research at State Street Global Markets.
“Nvidia results suggest that those earnings are likely to remain strong, very visible, and that’s a very strong support for the equity market.”
US labour market remains sluggish
Meanwhile, data showed US job growth accelerated in September, but the unemployment rate rose to 4.4 per cent, suggesting labour market conditions remained sluggish. Traders continued to bet the Federal Reserve will skip an interest rate cut in December.
The European tech index pared earlier gains to edge up 0.1 per cent.
“We are seeing European tech stocks caught up in the overall enthusiasm for the tech trade,” said Laura Cooper, head of macro credit at Nuveen.
AI equipment makers that have benefited from the technology boom, such as Siemens Energy, gained 2.9 per cent.
Europe’s defence index was up 1.3 per cent, having slid nearly 3 per cent on Wednesday on signs of a new US-led push to end the Russia-Ukraine war. Rheinmetall gained 2.6 per cent, while Leonardo added 2.9 per cent.
Bank stocks rose 0.8 per cent and energy climbed 1.1 per cent.
European auto stocks lost 1.4 per cent. French car parts supplier Valeo fell 13 per cent after it provided mid-term guidance below expectations. The media sector declined 1.9 per cent.
Among other moves, BNP Paribas gained 4.4 per cent after the French bank raised its CET1 ratio target, a gauge of financial stability, to 13 per cent by 2027.
Games Workshop shares hit a record high, up 13.5 per cent, on a strong half-year forecast, while Halma rose 9.2 per cent after raising its annual revenue forecast.
JD Sports Fashion lost 3.9 per cent after it forecast annual profit at the lower end of market expectations.
Data showed eurozone consumer confidence remained stable at -14.2 in November. REUTERS
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