Europe close: Nvidia rally falters as rate fears take hold again

(Sharecast News) - The rally on European markets petered out at the close on Thursday, as sentiment boosted by strong results from US tech giant Nvidia gave way to concerns that Federal Reserve chair Jerome Powell may not call a peak in US interest rates.



The pan-European Stoxx 600 index closed 0.15% higher at 454.12 with markets turning mixed in the afternoon session as investors turned their attention to comments from US Federal Reserve Chairman Jerome Powell on Friday at the conclusion of the central bank's symposium in Jackson Hole, Wyoming.

Falling yields on long-dated US Treasury notes meant borrowing costs also came down, easing investor concerns about persistent inflation and the possibility of central banks keeping monetary policy tighter for longer.

"Thursday's rally in European and U.S. stock indices on the back off much-better-than expected Nvidia Q2 results ran out of puff as investors took money off the table ahead of Jerome Powell's Jackson Hole speech on Friday," said Axel Rudolph, senior market analyst at online trading platform IG.

"In it the Fed Chair is expected to disappoint investors looking for reassurance that US rates have peaked. UK retail sales falling the most in two years and U.S. durable goods orders the most in over three years also put a dampener on stocks."

Shares had made a bright start after Nvidia smashed Wall Street expectations as the boom in artificial intelligence drove demand for the tech company's chips, with sales of $16bn expected in the three months to October.

"That is streets away from analyst expectations and reflects the seemingly insatiable appetite for Nvidia's products, which are the leading option for creating AI tools like ChatGPT. Nvidia's H100 chip, where demand is far outpacing supply, is currently selling for double its original price in the tens of thousands," said Hargreaves Lansdown analyst Sophie Lund-Yates.

The news boosted shares in Dutch chipmaker ASML, STMicroelectronic, and Nordic Semiconductor.

In other equity news, German flavor and fragrance maker Symrise rose after an upgrade from Morgan Stanley.

Crude oil prices fell as business activity data in the US and Europe sparked fears about waning demand, with the benchmark Brent crude below $83 a barrel.

Reporting by Frank Prenesti for Sharecast.com