Milan [Italy] / Singapore, July 16: World shares steadied on Wednesday as upbeat earnings from chipmaking equipment maker ASML revived the AI trade, helping offset concerns about the fallout from fresh hostilities involving Iran and a surge in oil prices.
Europe's STOXX 600 index was just below parity by 1142 GMT after rallying the previous day when softer-than-expected US inflation data cooled concerns about higher interest rates, pushing the dollar and yields lower.
Tech-heavy markets in the US and Asia fared better.
Nasdaq futures rose 0.5 percent, alongside a 0.1 percent gain in S&P 500 futures, signalling a firmer open on Wall Street as investors assessed a fresh wave of corporate earnings.
"The divergence between the US and Europe seems to be driven mainly by technology stocks, which are outperforming again," said Swissquote senior analyst Ipek Ozkardeskaya. "ASML's results came in sweet."
The world's biggest supplier of chipmaking equipment raised its 2026 forecasts and announced plans to expand capacity, as demand linked to artificial intelligence helped the company beat quarterly earnings expectations.
Its shares rose as much as 8 percent in Amsterdam, helping lift other AI-related stocks after recent volatility caused by concerns that valuations and AI spending expectations had outpaced fundamentals. They pared gains and were last up 4 percent.
The MSCI World Price Index was broadly unchanged. South Korea's tech-heavy KOSPI index was up over 6 percent, with memory chip maker SK Hynix jumping 8.8 percent in Seoul. Japan's Nikkei gained 1.5 percent.
On Tuesday, the US headline consumer price index fell 0.4 percent in June, its first decline since the COVID-19 pandemic, while core inflation for the month was flat.
Bond yields and the dollar fell after the data, leaving the euro steady above $1.14 on Wednesday.
Two-year Treasury yields edged up 2.4 basis points (bps) to 4.21 percent on Wednesday but remained roughly 8 bps below Tuesday's 17-month high.
"For market bulls this is even better than Goldilocks could have imagined," JP Morgan analysts said in aclient note.
"This print should remove any fears over a July rate hike and may assuage fears on September, too. This sets up the market to move higher and to broaden as it does so."
Further gains were tempered after Federal Reserve Chair Kevin Warsh told Congress that one benign inflation reading was not enough to declare victory overinflation.
Investors will closely watch his testimony later Wednesday, along with US producer price data and the Fed's Beige Book, for further clues on the policy outlook.
In Europe, Germany's 2-year yields rose 1 bp to 2.75 percent, but remained below Tuesday's 2-year high.
Meanwhile the US earnings season kept surprising on the upside following a strong start to the reporting season from some Wall Street banks that buoyed risk sentiment.
Morgan Stanley reported a rise in second-quarter profit, driven by strong mergers and acquisitions activity despite macroeconomic uncertainty, sending its shares up 2.8 percent in premarket trading.
BlackRock also reported a jump in quarterly profit, as a stock market rally boosted the value of client assets, while healthcare conglomerate Johnson & Johnson beat Wall Street estimates for sales and profit.
The Bank of Canada's policy decision is also due later on Wednesday, with the benchmark rate widely expected to remain unchanged. The Canadian dollar was broadly steady above 1.40.
Oil extended gains on Wednesday as President Donald Trump reimposed a naval blockade on Iranian ports and Iran's Islamic Revolutionary Guard Corps threatened to close export corridors that benefit the US and its allies.
Brent futures climbed 0.7 percent to $85.3 a barrel.
In China, annual economic growth slowed sharply to 4.3 percent in the second quarter, missing analysts' expectations as weak domestic demand outweighed stronger production and exports.
A rebound in Chinese retail sales in June, relatively strong nominal GDP and hopes that authorities will respond were the positives for investors.
"I don't think they will be worried enough to announce any big stimulus, but it is going to be targeted, since they are aware that growth is only for the tech areas whereas the broader economy is continuing to underperform," said UOB economist Woei Chen Ho.
China's yuan traded at 6.771 to the dollar, just below a one-month high.
Spot gold was down 0.6 percent at $4,029.3 per ounce, paring part of Tuesday's more than 2 percent surge as higher oil prices fuelled inflation concerns and uncertainty over the US rate outlook.
Source: Qatar Tribune
