Europe: Shares flat; investors brace for Nvidia results

EUROPEAN shares closed flat on Wednesday while investors looked ahead to a high-stakes earnings report from chipmaker Nvidia, which could set the direction for trading in artificial intelligence-related stocks.

The pan-European Stoxx 600 ended flat at 561.71 points. Most other major regional indexes fell, with Germany’s DAX down 0.1 per cent, France’s CAC 40 losing 0.2 per cent, and the UK’s FTSE 100 falling 0.5 per cent.

The Stoxx index fell 1.7 per cent on Tuesday, its biggest one-day drop in more than three months, on worries that the global tech rally, seen for much of the year, had turned into a potential bubble.

Nvidia’s earnings, due after markets close on Wednesday, are seen as a litmus test for the AI-driven rally, and could either stoke or soothe investor worries about lofty valuations.

“What the market is trying to do now with Nvidia is get to grips with whether there’s real underlying growth and profitability there, or whether the valuation has blown out and bifurcated from the fundamentals,” said Michael Field, chief equity strategist at Morningstar.

“AI sentiment isn’t just affecting the US now, it’s affecting everything.”

On Wednesday, European aerospace and defence stocks fell 2.3 per cent to the lowest level since early September on signs of a fresh US-led push to end the Russia-Ukraine war.

Shares in Rheinmetall, Renk, BAE Systems, Leonardo, Saab were among the biggest losers on the STOXX index, with losses ranging from 4.5 per cent to 7.7 per cent.

Utilities lost 1.4 per cent, while energy sector declined 0.4 per cent.

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Conversely, tech stocks wiped out early losses to advance 0.4 per cent.

Sage rose 1.2 per cent after reporting a better-than-expected 16 per cent rise in underlying operating profit.

Media stocks gained 2 per cent, with Universal Music Group rising 6.2 per cent.

Mining stocks rose 0.8 per cent, tracking higher gold prices. Fresnillo added 5.8 per cent.

Investors are also awaiting the US labour market report, due on Thursday, at a time when Fed policymakers are divided on the central bank’s monetary policy verdict next month.

In the UK, inflation slowed last month for the first time since May, cementing expectations that the Bank of England could cut interest rates in December.

Among individual stocks, Kering lost 4.2 per cent after the luxury company’s chief executive Luca de Meo said a return to growth will require reducing its reliance on struggling flagship Gucci, further scaling back its store network and chasing more synergies, according to a memo seen by Reuters.

Nokia fell 6.9 per cent after the Finnish telecoms equipment maker’s new long-term financial targets missed market expectations. Danish cable solutions provider NKT jumped 17.1 per cent after reporting quarterly results and 2030 forecasts. REUTERS