European stocks rise as investors take heart from corporate earnings

US futures and European stocks advanced on Thursday after suffering recent declines, as investors took heart from the prospect that stronger economic growth would boost corporate earnings.

The region-wide Stoxx 600 added 0.2 per cent, while Germany’s Dax rose 0.5 per cent and France’s CAC 40 climbed 0.4 per cent.

Traders’ optimism was boosted by strong earnings overnight from US chipmaker Nvidia, whose results beat analysts’ expectations, in part because its graphics cards are used in artificial intelligence.

Shares in Nvidia jumped more than 7 per cent in after-hours trading in the US, lifting the prices of Asian and European peers such as Taiwan Semiconductor Manufacturing, up 2 per cent, and ASML of the Netherlands, which added 2.3 per cent. Rolls-Royce shares jumped about 25 per cent after beating earnings forecasts.

Futures contracts tracking the blue-chip S&P 500 rose 0.5 per cent, while the equivalent for the tech-heavy Nasdaq jumped 8 per cent. US equities fell on Wednesday for the fourth day in a row.

The earnings boost outweighed lingering concerns that the US Federal Reserve would have to keep interest rates higher for longer to curb inflation.

Minutes from the Fed’s January policy meeting, released on Wednesday, showed that most officials backed the decision to raise benchmark interest rates by 0.25 percentage points and a few preferred a half-point increase.

“The participants favouring a 50-basis point increase noted that a larger increase would more quickly bring the target range close to the levels they believed would achieve a sufficiently restrictive stance,” the minutes said.

However, the meeting took place before a batch of economic data released in recent weeks that showed the economy was more resilient than economists had expected. Investors have recently been forced to reset their forecasts, and the data is expected to spur the Fed to continue with its aggressive monetary stance.

“At the [Federal Open Market Committee] itself, the market was looking for anything dovish to latch on to,” said analysts at ING. “From the minutes, that’s flipped, with the market now fretting over any hawkish hints.”

The euro and the dollar index, which measures the greenback against a basket of six other currencies, were flat.

US Treasury yields fluctuated, with 10-year notes up 0.02 percentage points at 3.94 per cent and two-year notes, which are more sensitive to monetary policy, up 0.01 percentage points to 4.71 per cent.

Hong Kong’s Hang Seng index fell 0.4 per cent, while China’s CSI 300 lost 0.1 per cent.

Brent crude rose 1 per cent to $81.51 per barrel, while WTI, the US equivalent, gained 1.1 per cent to $74.79.

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