Europe open: Stocks fall after UK data, nerves set in ahead of Nvidia
European stock markets headed lower on Wednesday morning as investors digested some mixed inflation data from the UK and awaited blockbuster quarterly earnings from American chip giant Nvidia.
By 0945 CEST, the Stoxx 600 index was down 0.4% at 520.82, continuing to pull back after hitting a new all-time high of 524.71 a week earlier. Most major indices across the continent were registering losses of between 0.25% and 0.5%.
Figures released earlier by the Office for National Statistics showed that consumer price inflation dropped to 2.3% in April from 3.2% the month before, hitting its lowest level since July 2021 and edging closer to the Bank of England’s 2% target. However, it was above the 2.1% expected.
Paul Dales, chief UK economist at Capital Economics, said the smaller-than-expected fall in CPI inflation makes a June rate cut by the BoE unlikely and casts some doubt over August too.
Later on Wednesday, chipmaker Nvidia reports quarterly results after Wall Street closes. The company is largely seen as the poster-child for the massive surge in US equity markets so far this year, as investors continue to pour into names in the AI space. However, having gained 20% over the past month and by 98% year-to-date, Nvidia has a lot to live up to.
"Today is probably the most important and certainly the most-awaited day of the earnings season as Nvidia is due to reveal its Q1 earnings after the bell," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank
"Normally, when expectations are high, they are harder to beat. But Nvidia has a track record of pumping expectations and beating them with a comfortable margin since the arrival of OpenAI into our lives, at the start of last year.
In corporate news, RS Group tumbled 6% in London to become the heaviest faller on the Stoxx 600 after saying that annual profits dropped by a quarter. The industrial and electrical products provider - formerly Electrocomponents - pinned the blame on weakness in global industrial production and the unwinding of unusual post-pandemic trading tailwinds.
Marks & Spencer surged 8% to top the risers list across Europe as the British retailer reinstated its dividend and posted a jump in full-year sales and profits as the retailer’s turnaround efforts bore fruit.
Swedish paper group Billerud rose sharply after the company said it was scrapping plans to convert its Escanaba paper mill to produce cartonboard due to financial considerations.
Dutch engineer Aalberts declined after reporting a drop in organic revenues over the first four months of 2024, as strength in the industrial tech division was offset by weakness in building technology.