STOXX Europe 600 unchanged
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Chip stocks rally on Nvidia boost
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German economy enters recession in Q1
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Nasdaq futures up 1.7%
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UK TRADED GOODS INFLATION: DEFYING GRAVITY BUT FOR HOW LONG? (0902 GMT)
All eyes are on anything related to semiconductors this morning, which are enjoying a glittering AI-related boost and tempering any steeper falls as the STOXX 600 steadies.
But the market is still digesting Wednesday's UK inflation surprise, and for strategists at Morgan Stanley, the big story was the "extreme resilience" in UK core goods inflation.
The print showed food prices still rising sharply despite a drop back to single digits for the headline inflation rate in April, leaving Bank of England Governor Andrew Bailey concerned.
"We adjust our forecasts to reflect more resilient near term traded goods inflation, with a sharper collapse in 2024," write the MS strategists.
Crunching the numbers, it is the strength in traded goods inflation that makes the UK an outlier when compared to the US and the euro area, they say.
"This month, used cars and recreational items were the main culprits for the surprise tick up in traded goods inflation."
This resilience comes amid a sharp correction in global manufacturing and shipping costs, with an ongoing inflection in US core goods inflation, and more recently in the euro area as well.
Some of it has to do with retail sector margin expansion, while some can also be attributed to a result of "faster and sharper FX pass-through than in previous cycles"
"But gravity can only be defied for so long," the Morgan Stanley strategists say.
For that reason, though they up their near-term traded goods inflation forecast, they also foresee a bigger drop in the sector over the final quarter of this year and throughout next.
Still, they remain convinced that the BoE will hike in June for the final time.
(Lucy Raitano)
TECH SUPPORT HELPS STOXX STEADY (0847 GMT)
The strong Nvidia beat is doing its thing, helping stem a two day selloff across European equity markets, with a rally in chip stocks helping benchmarks steady in early trades, even as data showed the German economy entered into a recession.
The STOXX Europe 600 was last just down 0.1% and the EuroSTOXX50 added 0.1% following two days of heavy losses. A 2% bounce in tech gave support.
Other sectors were mostly lower though led by retailers and real estate.
Amsterdam's AEX index, where top chip stocks listed, stood out with a 0.4% gain.
Here's your snapshot with top country indices.
NVIDIA TO THE RESCUE (0630 GMT) A two-day European selloff looked set to pause on Thursday as stellar numbers from semiconductor heavyweight Nvidia brought relief to markets concerned over the lack of progress in U.S. debt ceiling talks and new signs of sticky inflation in Europe.
After a jump in UK core inflation contributed to push the region wide STOXX Europe 600 benchmark into its worst day in two months, index futures pointed to slight gains in the day ahead.
Derivative contracts on the EuroSTOXX50 and FTSE were up 0.1-0.2%.
Nasdaq futures rallied 1.4% while Frankfurt-listed Nvidia shares advanced 23%. The world's most valuable listed semiconductor company forecast Q2 revenue over 50% above Wall Street estimates. It said it is boosting supply of artificial-intelligence chips to meet surging demand.
The Nvidia beat was expected to boost European chip stocks such as ASM, ASML, Be Semi, Infineon and Siltronic. Traders also pointed to positive reaction in insurer Generali and ingredients maker Tate & Lyle following results.
Placements in audio solutions firm GN Store and health and nutrition group DSM-Firmenich were set to hit their shares at the open.
FITCH PUTS US ON WATCH; WILL IT MATTER IN WASHINGTON? (0554 GMT)
The U.S. debt ceiling saga continues to hang over global markets, with the White House and Republicans both citing progress in the latest round of talks but no breakthrough yet.
Ratings agency Fitch opted not to wait, placing the country's "AAA" rating on watch for a possible downgrade - the first major agency to do so. That could raise the stakes in protracted negotiations as the June 1 "X-date" looms - or policymakers in Washington might simply choose to ignore it.
The ratings watch has given a further boost to U.S Treasury yields and the greenback, with the dollar index notching new trend highs while Japan's yen hit its lowest since Nov. 30 and the euro and sterling are sitting on major chart support.
Two-year Treasury yields have also extended to highs not seen since mid-March, while the yield on Treasury bills maturing in early June climbed further above 7%.
Stock markets across Asia are in the red, apart from Japan's effervescent Nikkei, although S&P E-mini and Nasdaq futures have bounced after a strong revenue forecast from Nvidia Corp .
Europe's data calendar is fairly light, with German final Q2 GDP the main release. However, there are plenty of central bank speakers, with comments from Bundesbank head Joachim Nagel and ECB chief economist Philip Lane likely to draw the most interest.
Bank of England monetary policy committee member Jonathan Haskell's speech in Washington will also be watched after UK price data again surpassed expectations on Wednesday. That left Governor Andrew Bailey fretting about "sticky and stubborn" inflation while markets priced in further policy tightening.
Expectations of a Federal Reserve rate hike in June also continued to creep up, even after the May 2-3 meeting minutes showed little consensus on the need for further increases.
Key developments that could influence markets on Thursday:
German final Q1 GDP and June GfK consumer sentiment
Bundesbank chief Nagel, ECB's Lane and de Guindos, and BoE's Haskell speak
U.S. weekly jobless claims and second estimate of Q1 GDP
Earnings: Dollar Tree, Ralph Lauren and Gap
(Sonali Desai)