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European Shares Rise as Nvidia Forecast Boosts Chipmakers

European stocks rose on Thursday, buoyed by strong forecasts from AI leader Nvidia (NASDAQ:NVDA) that boosted global chipmakers. Additionally, improved business activity in the euro zone led traders to reduce their expectations of interest rate cuts this year.

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The pan-European STOXX 600 index climbed 0.2%, with the tech sector leading gains, rising 1.4%.

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European semiconductor stocks, including ASML (AS:ASML), Infineon (OTC:IFNNY), and ASM, saw their shares increase between 1% and 3.6% following Nvidia’s optimistic quarterly revenue forecast, announcement of a stock split, and a 150% increase in its quarterly dividend on a post-split basis.

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On Wall Street, the tech-heavy Nasdaq appeared poised for a strong opening, with Nvidia shares climbing 6.9% in premarket trading.

While questions about the longevity of Nvidia’s technical supremacy are being whispered in some corners of the market, the group has raised the bar again with the Blackwell Platform, the world’s most powerful chip,” commented Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown. “Being at the forefront of the specialized end of this market is a highly enviable place to be. The big question, as ever, remains whether the current market valuation is a fair reflection of the remaining opportunity, or approaching dangerous territory.”

Despite the tech sector’s gains, the broader equities market faced pressure after a preliminary survey indicated that euro zone business activity expanded at its fastest pace in a year this month, driven by strong demand for services.

German 2-year bond yields hit a six-month high following the data, as traders adjusted their expectations for rate cuts from the European Central Bank. Traders were pricing in rate cuts of 57 basis points by the end of 2024, down from 67 basis points on Wednesday.

Rate-sensitive sectors such as utilities and real estate were the day’s biggest laggards. Britain’s National Grid (LON:NG) plunged nearly 10% after announcing plans to raise about 7 billion pounds ($8.9 billion) through a fully underwritten rights issue.

The UK’s FTSE 100 slipped 0.3% following Prime Minister Rishi Sunak’s announcement of a general election set for July 4.

Elsewhere, shares of Embracer Group fell 8.9% after the Swedish game developer reported its finance chief’s resignation for personal reasons and posted a fourth-quarter operating profit in line with market expectations.

Swiss bank Julius Baer saw a 3% rise in its shares as assets under management grew 10% to 471 billion Swiss francs ($515 billion) in the first four months of the year.

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