European stocks rebounded on Thursday morning, breaking a two-day decline. As investors focused on the prospect of stronger economic growth boosting corporate earnings. The region-wide Stoxx 600 rose by 0.3%, with Germany’s Dax up 0.6%, and France’s CAC 40 climbing 0.4%. The rise was driven by strong overnight earnings from US chipmaker Nvidia (NSD:NVDA), whose results beat analysts’ expectations, boosting the prices of Asian and European peers such as Taiwan Semiconductor Manufacturing (NYE:TSM) and ASML Holdings (NSD:ASML).
Rolls-Royce shares jump by nearly 20%
Shares in Rolls-Royce (OTC:RLLCF) also jumped by almost 20% after the company beat earnings forecasts. The British engineering company, which produces engines for the aerospace and defense sectors, said its full-year underlying pre-tax profit rose to £1.1bn ($1.5bn) from £813m a year earlier, driven by cost savings and rising demand for its products.
US Federal Reserve’s hawkish stance outweighed by positive economic data
The earnings boost outweighed concerns that the US Federal Reserve would keep interest rates higher for longer to curb inflation. Minutes from the Fed’s January policy meeting, released on Wednesday, showed most officials backed the decision to raise benchmark interest rates by 0.25 percentage points. A few preferred a half-point increase. 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.
Euro rises against the dollar
The euro rose 0.1% against the dollar, while the dollar index fell by 0.1%. US Treasury yields remained relatively stable, with 10-year notes flat at 3.93%, and two-year notes, which are more sensitive to monetary policy, flat at 4.7%.
Brent crude rises as oil prices remain steady
Brent crude rose 0.3% to $80.86 per barrel, while WTI, the US equivalent, also gained 0.3% to $74.18. This came as oil prices remained steady despite rising coronavirus cases and renewed concerns about travel restrictions impacting demand.
Hong Kong’s Hang Seng index falls, while China’s CSI 300 loses
In Asia, Hong Kong’s Hang Seng index fell 0.4%, while China’s CSI 300 lost 0.1%. This was in line with the previous day’s declines in US equities, which fell for the fourth day in a row. Futures contracts tracking the blue-chip S&P 500 rose by 0.5%, while the equivalent for the tech-heavy NASDAQ jumped 1%.