European stock market sell-off loses steam as shares move higher ahead of Nvidia earnings

LONDON — European equity markets showed tentative signs that an ongoing sell-off was beginning to lose steam on Wednesday, after days of being ravaged by lingering doubts over tech stocks.

The pan-European Stoxx 600 pared earlier losses to trade 0.2% higher by 11:21 a.m. London time (6:21 a.m. ET), with sectors and major bourses in mixed territory.

Global markets have been on edge this week with conerns over artificial intelligence-related tech stocks and valuations returning to the fore.

U.S. stock futures were slightly higher on Wednesday after major U.S. indexes extended their losses on Tuesday, driven again by pressure in tech shares. Investors on Wednesday are now preparing themselves for Nvidia’s earnings report, due to be released after the U.S. market close, to inform the strength of the AI trade.

Analysts largely expect Nvidia to meaningfully beat Wall Street’s expectations and forecast strong sales growth, driven by demand for its AI chips and other infrastructure.

But the company has to meet lofty expectations among investors, who have taken profits from their tech holdings in recent days, reflecting heightened concerns that the AI boom has run up the valuations of Nvidia and other tech hyperscalers.

Looking at individual stocks in Europe, shares of luxury giant Kering fell 2.5% after CEO Luca de Meo said returning to growth will require downsizing its store network and reducing its reliance on its Gucci brand, according to an internal memo seen by Reuters. 

De Meo set an 18-month deadline to return to growth for all its brands, including Yves Saint Laurent and Bottega Veneta, as the luxury group grapples with declining sales. It comes just a month after the group agreed to sell its beauty business to L’Oreal for 4 billion euros ($4.6 billion).

British engineering firm Smiths Group pared earlier gains to shed 0.2% after announcing a £1 billion ($1.3 billion) share buyback program on Wednesday, and organic revenue growth of 3.5% in its fiscal first quarter.

Shares of U.K. travel retailer WH Smith rose 4.2% after it was announced CEO Carl Cowling would step down from his position following the findings of an independent review into an accounting blunder that occurred earlier this year. Over the summer, the company admitted to a £30 million “overstatement” of anticipated headline trading profit in its North America division, sending shares into a nosedive.

Elsewhere, Paris-listed shares of media holding company Vivendi plummeted as much as 20% after French media reported a court seemed likely to rule in favor of Bolloré Group, which is disputing that it is Vivendi’s controlling shareholder. Bolloré holds close to a 30% stake in Vivendi, and a ruling in its favor would end speculation around a mandatory takeover bid from the former. A ruling is expected on Nov. 28. Vivendi didn’t immediately respond to a CNBC request to comment.

Finnish telecoms staple Nokia saw its shares fall 3.3%, reversing course from earlier gains after the company announced a new strategy focused on AI-enabled networks, and set a new profit target of growing annual comparable operating profit to a range of 2.7 to 3.2 billion euros by 2028. The announcement, which came ahead of the firm’s Capital Markets Day, also included news that the firm would reorganize into two units: Network Infrastructure and Mobile Infrastructure.

Data released on Wednesday morning showed the U.K.’s annual inflation rate cooled to 3.6% in October, raising the chances of a Christmas rate cut from the Bank of England. The print, which comes a week before the government’s high stakes Autumn Budget, was in line with economists’ expectations.

Sterling was lower against both the U.S. dollar and the euro after the release.

Meanwhile, yields on U.K. government bonds — known as gilts — were mixed across the maturity curve. The yield on the short-term 2-year gilt fell by around 2 basis points in late morning trade, while the benchmark 10-year and other longer-term gilts saw yields tick around 2 basis points higher.

The U.K. government has the highest long-term borrowing costs of any G-7 nation, with the yield on its 30-year gilt trading well above the critical 5% threshold.

In a note sent after the inflation release, Deutsche Bank’s Chief U.K. Economist Sanjay Raja said Tuesday’s data made a rate cut from the Bank of England’s Monetary Policy Committee next month more likely.

“With the labour market softening more than expected, GDP growth weaker than the Bank of England projected, and (underlying) inflation tracking a little lower than BoE expectations, we think Governor [Andrew] Bailey — who will likely have the deciding vote for December — will feel more confident about cutting [the] Bank Rate below 4%,” he said.

— CNBC’s Pia Singh and Elsa Ohlen contributed to this market report.