European Markets Soar to New Heights
Tech Stocks Lead the Charge
European shares reached an all-time high on Wednesday, driven by a surge in technology stocks. The pan-European STOXX 600 index rose 0.5% to a record high, surpassing Tuesday’s close. The catalyst behind this rally was ASML, a Dutch chip equipment maker, which reported impressive quarterly results.
ASML’s Stellar Performance
ASML’s shares skyrocketed 11.2% after the company announced better-than-expected fourth-quarter bookings of €7.09 billion ($7.39 billion). This news alleviated concerns about the health of the AI chip industry, which had been sparked by the release of China’s DeepSeek model earlier this week. ASML’s earnings report demonstrated that demand for AI chips remains strong, despite the initial selloff.
Ripple Effect in Tech Sector
The positive sentiment surrounding ASML’s results spread to other technology stocks. STMicroelectronics, BE Semiconductor, and ASM International saw their shares rise between 2.1% and 7.2%. As a result, the technology sector emerged as the top performer, surging 4.5% and poised for its best single-day gain in a year.
Market Analysts Weigh In
Teeuwe Mevissen, Senior Market Economist at Rabobank, noted that ASML’s strong performance indicates that demand from the chip sector remains robust. “It seems that for now, the fears for the whole AI and supply chain for AI have been overblown,” Mevissen said.
Industrial Goods Sector Sees Gains
Meanwhile, Swedish truck maker Volvo reported strong orders in the fourth quarter, sending its shares up about 7%. This boost helped lift the industrial goods sector by 1.3%.
Luxury Goods Sector Disappoints
On the other hand, LVMH’s sales growth failed to impress investors, leading to a 5.6% decline in its shares. Rivals Kering and Christian Dior also fell 6.4% and 5.2%, respectively, weighing on the French benchmark CAC 40 index, which lost 0.2%.
Central Banks in Focus
The U.S. Federal Reserve’s monetary policy decision is expected to be a key event, with policymakers likely to keep interest rates unchanged. The European Central Bank is anticipated to cut rates by 25 basis points on Thursday, with investors eager to hear policymakers’ views on the impact of Donald Trump’s proposed trade duties on the bloc’s policy outlook.
Economic Data Roundup
In other economic news, euro zone lending growth accelerated in December, suggesting that interest rate hikes are starting to have a positive impact on the real economy. However, German consumer sentiment is expected to dip heading into February due to growing pessimism among households about the economy and their income prospects. Spain’s economy, meanwhile, expanded a stronger-than-expected 3.2% in 2024, outperforming its euro zone peers.
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