European Stocks Set for Strong Open

European equity markets were poised to open little changed on Wednesday as investors assessed dovish signals from a Federal Reserve official while awaiting key US inflation data. New York Fed President John Williams indicated that one additional rate hike may be warranted this year, but further monetary tightening would likely be unnecessary in 2027. In Europe, attention will turn to German wholesale prices and Spanish consumer inflation figures, alongside further remarks from ECB President Christine Lagarde. On Tuesday, Lagarde noted that elevated euro-area inflation, driven by rising energy prices, had yet to spread to the broader economy. In corporate news, Dutch chipmaker ASML said it would be unable to fully meet demand over the next two years, raising further concerns about the sustainability of the AI investment boom. In premarket trading, Euro Stoxx 50 futures hovered around the flatline.

European stocks erased early gains and closed firmly lower on Tuesday amid sharp losses for the AI infrastructure sector and heavyweight industrials. The Euro STOXX 50 fell 0.6% to 6,170 and the STOXX Europe 600 eased 0.2% to 635. ASML slid 4.2% ahead of its earnings report this week, tracking sharp losses for chip producers across major Western economies after Chinese chipmaker CXMT said it achieved a breakthrough in its memory architecture that rivals Korean and US competitors. Meanwhile, LVMH closed slightly lower after its fashion and leather goods revenue fell 5% year-over-year in the third quarter due to slower sales in China. The developments prompted analysts and brokers to downgrade recommendations on Hermès, pushing the stock 2% lower. On the other hand, banks were mostly higher, with UniCredit and Nordea adding nearly 1%.

European stocks were mixed on Tuesday, with the STOXX 50 hovering around the flatline and the STOXX 600 rising 0.3%, as a renewed global tech sell-off, fuelled by concerns over the sustainability of the AI trade, spilled over into European markets. Meanwhile, falling oil prices and bond yields provided some support to equity markets. ASML Holding tumbled 3.4%, while Infineon Technologies plunged 4.8% and STMicroelectronics fell 4.6%. Investors also assessed the latest corporate earnings, with LVMH falling 1.3% after reporting weaker-than-expected Q3 organic sales, weighed down by cooling Chinese demand. Its fashion and leather goods division, a key revenue driver, recorded a 5% decline. Elsewhere, Hermes fell 1%, while Richemont slipped 0.5%. Siemens Energy lost 2.2%. In contrast, the banking sector was a bright spot, with HSBC (1.5%) and Santander (0.7%) trading higher. Novartis (1.6%), AstraZeneca (2.1%) and Unilever (1.3%) also booked strong gains.