Europe midday: Stocks gain as Nvidia boosts mood; EZ data in focus

23rd May 2024 10:47

(Sharecast News) - European stocks were still firmer by midday on Thursday as investors mulled the latest reading on eurozone business activity and blowout earnings from US tech giant Nvidia.

The benchmark Stoxx 600 index and Germany's DAX were both up 0.3%, while France's CAC 40 was 0.2% higher.

Semiconductor stock Infineon was higher after Nvidia's first-quarter earnings beat expectations, with revenue up a whopping 262%.

Dan Coatsworth, investment analyst at AJ Bell, said: "Expectations were high for Nvidia in the run-up to its latest results so to smash forecasts is a major achievement. That makes it six quarters in a row it has beaten the consensus earnings estimate and seven consecutive quarters for revenue. The chip giant is riding a gigantic wave that shows little sign of losing power.

"Nvidia's earnings forecasts had already been upgraded six times by analysts since the start of January, according to Stockopedia data, and the latest results means financial models will have to be tweaked upwards again.

"A ten-for-one stock split should appeal to retail investors, making an individual share in Nvidia more affordable to the masses. Issuing more shares will automatically lower the share price and make it appear less expensive."

Elsewhere, UK investment platform Hargreaves Lansdown surged after confirming it had rejected a 985p per share takeover offer from a consortium comprising CVC, Nordic Capital and Platinum Ivy, which is a wholly-owned subsidiary of Abu Dhabi Investment Authority. It said the proposal "substantially undervalues" Hargreaves Lansdown and its future prospects.

Budget airline Wizz Air flew higher after saying it swung to a profit of €365.9m in the year to the end of March from a loss of €531.1m the year earlier amid "sustained" demand.

On the macro front, a preliminary survey released earlier showed the economic recovery in the eurozone gathered pace in May.

The HCOB flash eurozone composite PMI output index rose to 52.3 from 51.7 in April, marking the third month in a row that business activity expanded. A reading above 50.0 signals expansion, while a reading below indicates contraction. Analysts were expecting a reading of 52.0.

The overall expansion was again driven by the service sector, where activity was up for the fourth month in a row. The pace of growth was unchanged on that seen in April.

Meanwhile, manufacturing production continued to fall, extending the current sequence of decline to 14 months.

The survey also showed that new orders rose at the fastest pace in more than year.

Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: "This looks as good as it could be. The PMI composite for May indicates growth for three months straight and that the eurozone's economy is gathering further strength. Encouragingly, new orders are growing at a healthy rate while the companies' confidence is reflected by a steady hiring pace.

"This time, there is also some good news for the European Central Bank (ECB) as the rates of inflation for input and output prices in the services sector has softened compared to the month before. This will be supportive for the apparent stance of the ECB to cut rates at the meeting on June 6. However, the better inflation outlook will be most probably not be enough for the central bank to announce that further rate cuts will follow suit."