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Monday, April 22, 2024

European stocks up on chip gains, Ubisoft at 3-week high

European shares extended their rebound on Tuesday, with chipmakers driving a surge in technology stocks ahead of Nvidia’s earnings announcement. Additionally, Ubisoft reached a three-week high following Activision’s plans to sell streaming rights.

The pan-European STOXX 600 closed up 0.7%, peaking at a 1.2% intraday gain, marking a second consecutive day of advancement. The technology sector surged by 2%, reaching a one-week high.

Chipmakers like ASML Holding N.V., ASM International N.V., and BE Semiconductor Industries N.V. listed in Amsterdam rose by 0.7% to 3.3%, fostering optimism about Nvidia’s upcoming quarterly results.

Paris-listed STMicroelectronics gained 2.5%, bolstering the tech sector.

“Markets are hoping that the AI (artificial intelligence) hype is going to result in some profitability,” noted Giles Coghlan, Chief Market Analyst at HYCM.

In parallel, Ubisoft Entertainment’s shares soared 8.5% due to Activision Blizzard’s decision to sell streaming rights, propelling Ubisoft to the forefront of STOXX 600.

Novo Nordisk’s 0.7% gain continued to boost the healthcare sector, being Europe’s second most valuable listed company.

European miners also advanced by 1.9%, tracking higher metal prices.

Investor focus remains on the upcoming Jackson Hole Symposium, where European Central Bank President Christine Lagarde and Federal Reserve Chair Jerome Powell are expected to offer insights into the interest rate outlook.

August has been challenging for the STOXX 600, on track for its worst month in the year due to rising bond yields across Europe affecting stocks.

Coghlan commented, “I don’t see any signs of a deep recovery because it’s based on very weak sentiment… There isn’t any fundamental change in the economic setup to support a resurgence in stocks.” He added that an improved Chinese economic outlook, lower Fed and ECB interest rates, and a Russia-Ukraine ceasefire could potentially aid European stocks going forward.

A Reuters poll indicated that a slowdown in global growth might counteract the appealing valuation of the European equity market for the remainder of 2023. However, with easing price pressures, a more notable upturn could be in the cards for 2024.

Among individual stocks, Italian cable maker Prysmian gained 4% after being selected as the “preferred bidder” for three projects in Germany worth 4.5 billion euros ($4.88 billion). British recruiter Hays also gained 4.1% following a rating upgrade by Exane BP Paribas from “neutral” to “outperform.”

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