The rally in European stocks faltered on Wednesday as disappointing earnings in the banking and luxury sectors offset further gains for technology stocks.
The Stoxx Europe 600 was little changed after its biggest two-day advance since November. The tech sector climbed more than 2%, with ASM International NV surging after orders beat expectations. Banks weighed on the index, with Lloyds Banking Group Plc falling after missing estimates for lending income. Kering SA slumped, dragging luxury peers lower, after warning that profit will plunge on slowing sales at Gucci, its biggest brand.
US equity futures advanced, with contracts on the Nasdaq 100 outperforming. Tesla Inc.’s gains alone represented about a third of the rally in Nasdaq futures, according to data compiled by Bloomberg. The MSCI Asia Pacific Index increased the most in a month, with chip-related stocks among the best performers.
In addition to the strong performance of the US tech giants in Tuesday’s Wall Street rally, weakness in measures of business activity in the world’s largest economy also helped keep alive forecasts for Federal Reserve policy easing this year. The 10-year Treasury yield ticked higher and a gauge of the dollar was steady.
The S&P 500 notched its best back-to-back rally in two months. Nvidia Corp., the poster child of the artificial-intelligence boom, led a surge in chipmakers. Texas Instruments Inc. gave a bullish revenue forecast — a good sign for the chip industry that helped lift Asian and European producers on Wednesday.
Oil held a gain as an industry report showed shrinking US crude stockpiles and traders tracked progress toward fresh sanctions against Iran. Gold edged higher.
Elsewhere, the yen remained a whisker away from the key 155 level to the dollar, with a former top Japanese foreign exchange official warning the country is on the brink of currency intervention.
Earnings on Watch
In late US hours, Tesla soared as the electric-vehicle giant struck an upbeat tone despite a sales miss, the first of the “Magnificent Seven” megacaps to report. The stock halted a seven-day plunge, climbing alongside other members of the group.
Besides Tesla, Microsoft Corp., Meta Platforms Inc. and Alphabet Inc. are also due to report earnings this week. Profits for the “Magnificent Seven” group — which also includes Apple Inc., Amazon.com Inc. and Nvidia Corp. — are forecast to rise about 40% in the first quarter from a year ago, according to Bloomberg Intelligence data.
The group of tech megacaps is crucial to the S&P 500 since the companies carry the heaviest weightings in the benchmark. After this year’s advance, valuations have gotten lofty. After the latest selloff, the Magnificent Seven still traded at a combined 31 times forward earnings, according to data compiled by Bloomberg.