European stocks edge higher with focus on US inflation and Nvidia

Investors will watch Nvidia’s quarterly earnings on Wednesday to assess the strength of artificial intelligence-related sectors.

Nvidia chief executive Jensen Huang. Ahead of the giant chipmaker’s earnings, investors are getting ready to see whether the AI darling will at least match Wall Street’s lofty estimates. Picture: AP

European stocks inched higher on Tuesday as investors shied away from making big bets ahead of US inflation data and Nvidia earnings later this week.

The Stoxx 600 Index was up 0.2% by the close after fluctuating between small gains and losses through the session. Personal care and travel and leisure stocks outperformed, while consumer products lagged.

Among individual stocks, Penneys owner Associated British Foods recouped declines that were sparked by a rating downgrade from Deutsche Bank. Daimler Truck fell as Goldman Sachs cut its recommendation on the stock to neutral. Bunzl shares jumped after the distribution group raised its full-year profit guidance.

Europe’s equity benchmark is nearing a record high on dovish signals from the Federal Reserve around the outlook for interest rates. Still, investors remain defensive, with health care stocks and insurance among the most preferred sectors while autos and miners are lagging.

Clues

This week’s focus will be on the US personal consumption expenditures index, due on Friday, for further clues on how much the Fed is likely to cut interest rates. Investors will also watch Nvidia’s quarterly earnings on Wednesday to assess the strength of artificial intelligence-related sectors.

“In a week of light data on the macro front, European stocks will likely be driven more than usual by the developments in the US,” said Panmure Liberum strategist Joachim Klement. 

“We are still optimistic that Nvidia will beat expectations, but any sign of weakness in the numbers could lead to setbacks not just in US tech stocks, but European tech companies as well.” 

France’s CAC 40 Index was down 0.3%. 

Just a day ahead of the giant chipmaker’s earnings, investors are getting ready to see whether the AI darling will at least match Wall Street’s lofty estimates. 

Given its massive influence on broader indexes, Goldman Sachs’s trading desk has once called Nvidia “the most important stock on planet Earth". 

A member of the “Magnificent Seven” group of megacaps, the company has been responsible for over a third of the Nasdaq 100’s gain this year.

French President Emmanuel Macron is continuing consultations on appointing a viable prime minister after ruling out a government led by leftist candidate Lucie Castets in favour of a possible centrist coalition.

Bloomberg