European stocks stabilize amid anticipation of the Fed's decision and a rise in technology stocks
European stocks were relatively stable during trading today, taking a breather after two consecutive days of strong gains, as investors focused on analyzing the earnings results of major companies and statements from executives, amid cautious anticipation of crucial decisions regarding US monetary policy.
The European Stoxx 600 index was virtually unchanged, but the overall market picture masked significant sectoral movements, with the technology sector leading the gains with a remarkable rise of 2.7%, making it the biggest winner among the various sectors, driven by optimism about the future of artificial intelligence and global demand for electronic chips.
Record performance for ASML and a surge in artificial intelligence
At the heart of this technological performance stood out the stock of ASML, the world's largest supplier of computer chip manufacturing equipment, which hit a record high after a 6.9% jump. This strong surge followed the company's announcement of fourth-quarter order volumes that exceeded all expectations, reflecting exceptional resilience in global demand, driven primarily by the rapid expansion of generative artificial intelligence applications.
ASML’s performance is considered a vital indicator of the health of the global technology sector, as the Dutch company is an indispensable link in global chip supply chains, and its results confirm the continued momentum in technology investment despite economic challenges.
Await the Federal Reserve's decision and its global impact
Across the Atlantic, investors in Europe are focused on Washington, D.C., as the world awaits the U.S. Federal Reserve's interest rate decision. The prevailing expectation in financial markets is that the U.S. central bank will leave interest rates unchanged at this meeting.
However, the significance lies not only in the immediate decision itself, but also in the messages the Fed will send about the future of monetary policy, particularly given concerns about the bank's independence and potential political pressures. The Fed's decision directly impacts global capital flows and exchange rates, which in turn affects the performance of European exporters and the cost of financing in global markets.
Economic and geopolitical context
This divergence in stock performance comes amid a complex global landscape, as investors attempt to balance strong corporate earnings with escalating geopolitical risks and trade tensions that threaten supply chains. These factors play a crucial role in shaping market sentiment, with traders looking for any reassuring signs that the global economy can avoid recession and achieve a "soft landing.".
