European stocks enjoyed a small respite from two days of declines on Thursday morning as investors turned to the prospect that stronger economic growth would boost corporate earnings.
The region-wide Stoxx 600 rose 0.3 per cent while Germany’s Dax rose 0.6 per cent and France’s CAC 40 climbed 0.4 per cent.
Traders’ optimism was boosted by strong earnings overnight from US chipmaker Nvidia, whose results beat analysts’ expectations in part because its graphics cards are used in artificial intelligence.
Shares in Nvidia jumped more than 7 per cent in after-hours trading in the US, boosting the prices of Asian and European peers such as Taiwan Semiconductor Manufacturing, up 2 per cent, and ASML of the Netherlands, which added 2.3 per cent. Rolls-Royce shares jumped by almost 20 per cent after beating earnings forecasts.
Futures contracts tracking the blue-chip S&P 500 rose by 0.5 per cent, while the equivalent for the tech-heavy Nasdaq jumped 1 per cent. US equities fell on Wednesday for the fourth day in a row.
The earnings boost outweighed lingering concerns that the US Federal Reserve would have to keep interest rates higher for longer to curb inflation.
Minutes from the Fed’s January policy meeting, released on Wednesday, showed most officials backed the decision to raise benchmark interest rates by 0.25 percentage points and a few preferred a half-point increase.
“The participants favouring a 50-basis point increase noted that a larger increase would more quickly bring the target range close to the levels they believed would achieve a sufficiently restrictive stance,” the minutes said.
However, the meeting took place before a batch of economic data released in recent weeks that showed the economy was more resilient than economists had expected. In the past few weeks, investors have been forced to reset their forecasts, and the data is expected to spur the Fed to continue with its aggressive monetary stance.
“At the [Federal Open Market Committee] itself, the market was looking for anything dovish to latch on to,” said analysts at ING. “From the minutes, that’s flipped, with the market now fretting over any hawkish hints.”
The euro rose 0.1 per cent against the dollar, while the dollar index, which measures the greenback against a basket of six other currencies, fell by 0.1 per cent.
US Treasury yields fluctuated, with 10-year notes flat at 3.93 per cent and two-year notes, which are more sensitive to monetary policy, flat at 4.7 per cent.
Hong Kong’s Hang Seng index fell 0.4 per cent, while China’s CSI 300 lost 0.1 per cent.
Brent crude rose 0.3 per cent to $80.86 per barrel, while WTI, the US equivalent also gained 0.3 per cent to $74.18.
