ASML earnings boost tech stocks, lift European shares

European shares recovered from modest losses on Wednesday, buoyed by strong earnings from ASML, the world's leading supplier of chipmaking equipment. The tech giant reported AI-driven demand for its chip-printing tools was so robust that it could not fulfill customer orders in 2027 or 2028. ASML rose 2.4% as a result of the upbeat outlook, which helped lift market sentiment and support the bullish argument that tech stocks remain performing well.

Gordon Kerr, European macro strategist at KBRA, noted that the AI trade may be waning, but ASML's performance reinforced the argument that demand for chips remains strong and that infrastructure spending is likely to continue well into 2027.

The pan-European STOXX 600 index gained 0.48% to 638.07 points by 0857 GMT, after slipping from a one-week high on Tuesday. The technology sector led the rally, adding 1.2% and rebounding from Tuesday's global chip selloff, which was triggered by reports of advances by a Chinese chipmaker. Despite Europe's relatively lower exposure to such stocks, the sector remained the STOXX 600's best performer this year.

The STOXX 600 index has gained about 7.8% this year, trailing the chip-heavy Nasdaq and South Korea's KOSPI, which have climbed 17% and around 42%, respectively.

Luxury stocks rose 0.9%, but remain down 24.5% this year after LVMH's results on Monday reignited doubts about the sector's recovery from a three-year slump. Insurance stocks slipped 0.2%, dampening sector-wide gains. Markets remained cautious as oil prices fluctuated, with Brent trading above $100 a barrel. Inflation concerns stemming from the Middle East conflict have persisted, fueling expectations of tighter monetary policy.

The European Central Bank is expected to maintain interest rates at its October meeting, but traders assign an 81% chance of a rate hike in December, according to LSEG data.

Other notable movers included Orsted, which fell 3.2% following a Bloomberg News report that the US would reconsider its permit for its wind farm near Rhode Island. British IT firm Softcat declined 7% after warning of a slower growth outlook for fiscal 2027. Sweden's SEB dropped 5% after the country's bank regulator temporarily raised the lender's capital requirements due to flaws in its internal risk models.

Investors are also waiting for the upcoming US consumer price index data, released later on Wednesday, to gain insights into the Federal Reserve's policy stance.