European shares ticked up Monday as chip stocks advanced following Microsoft’s bumper AI investment announcement, kicking off a week packed with economic data around the world including inflation readings in Europe and jobs data in the United States.
Europe’s premier index, the STOXX 600 was up 0.2% as of 0918 GMT, taking cues from an upbeat close on Wall Street on Friday.
Technology led gains amongst the major STOXX sub-sectors, adding close to 3%, with chip stocks such as ASML, ASMI and STMicroelectronics at the helm of gains.
Semiconductor makers got a boost after Microsoft on Friday said it is planning to invest about $80 billion in fiscal 2025 on developing data centres to train artificial intelligence models and deploy AI and cloud-based applications.
“The demand amid US big tech for AI capability is voracious at the moment, so the expectation is that demand for semiconductor chips will still be extremely strong going through 2025,” said Susannah Streeter, head of money and markets, at Hargreaves Lansdown.
On the downside, food and beverages extended losses after Friday’s drop when the US surgeon general urged cancer warnings for alcoholic drinks, with stocks falling 0.7% on the day.
The data calendar for the week was heavy with inflation readings across Europe slated to be released throughout the week, starting off with a December German inflation reading due later in the day.
European stocks see off holiday-shortened week lower
On the day, data showed Germany’s service sector experienced a slight uptick last month, while a broader euro zone reading showed overall activity contracted for a second straight month.
This week’s centrepiece would be the December US nonfarm payrolls report due on Friday, a crucial metric in gauging the Federal Reserve’s interest rate path for 2025.
European equities lagged their US counterparts in 2024, as concerns about a slowing economy, political turmoil in Germany and France and the threat of tariffs from the incoming Donald Trump administration made for an uncertain outlook.
Among individual movers, UK’s Spectris gained 2.8% after HSBC upgraded its rating on the scientific instruments maker to “buy” from “hold”.
Rolls-Royce fell 3.7% after Citigroup downgraded its rating on the British engineering company to “neutral” from “buy”, while Unilever eased 1.8% after RBC downgraded its rating on the consumer goods group to “underperform” from “sector perform”.
Trading volumes are likely to improve this week as most market participants would return after two weeks of holiday-affected trading.
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