Tech Rally Lifts European Stocks as Fed Rate-Cut Signal Awaited

This content was published on July 31, 2024 - 12:25

3 minutes

(Bloomberg) — European equities rose on Wednesday ahead of central bank meetings in the US and Britain, with gains led by a rally in semiconductor stocks.

The Stoxx Europe 600 traded 1% higher as of 12:20 p.m. in Paris, and was set to end July with a monthly gain of about 1.5%. Tech was by far the best performing sector of Wednesday, with ASML Holding NV surging as much as 11% after Reuters reported that the Biden administration would exempt a number of foreign chip-equipment makers from upcoming export restrictions.

“We’re already full on on ASML so we can’t reinforce ourselves but if we could, and the news was confirmed, this would be a good entry point,” said Fares Hendi, portfolio manager at asset manager SG Prevoir in Paris.

Second-quarter earnings releases also helped reinforce the rally, with HSBC Holdings Plc adding about 4% after Noel Quinn signed off his final quarter as chief executive officer by announcing a further return of $3 billion to shareholders. Airbus SE gained as much as 7.2% after the airplane manufacturer’s second-quarter results topped expectations.

Trading on the Swiss stock market was halted from 10 a.m. Zurich time due to technical issues, SIX Swiss Exchange said.

In the US, Microsoft Corp.’s results on Tuesday have added to concern the artificial-intelligence frenzy might have gone too far. The company’s shares dropped in premarket trading, though futures on the Nasdaq 100 index rose, lifted by the likes of Advanced Micro Devices Inc. and Nvidia Corp. Meta Platforms Inc., Amazon.com Inc. and Apple Inc., are still due.

“We see this as an opportunity to get in rather than out,” Jacques Henry, head of cross-asset research at Silex in Geneva, said of tech shares, noting that second-quarter earnings had overall been positive in the sector so far.

On the central banking front, the Federal Reserve could signal an interest-rate cut at its September meeting, while money markets see a more than 50% chance the Bank of England will ease policy at its Thursday meeting. Earlier, the Bank of Japan raised interest rates, sparking a rally in Japanese bank shares.

For more on equity markets:

Markets Are on Shaky Ground Before Fed’s Decision: Taking Stock
M&A Watch Europe: Viaro Energy to Buy Gas Assets; Telefonica
Companies Return to Selling Shares to Fund Growth: ECM Watch
US Stock Futures Rise as Tech Rebounds Ahead of Fed Decision
Diageo Lowballs: The London Rush

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