- Nvidia's strong forecast boosts chipmakers
- German economy entered recession in Q1
- Luxury stocks extend slide for third day
May 25 (Reuters) - European stocks steadied on Thursday after their worst two-day selloff since March, as investors balanced concerns over the U.S. debt ceiling standoff and a global economic slowdown with optimism from upbeat corporate earnings.
The pan-European STOXX 600 index added 0.1% after shedding about 2.5% in the past two days, triggered by a selloff in luxury stocks and lack of progress in talks to raise the U.S. debt ceiling and avert a default.
Ratings agency Fitch put the United States' credit on watch for a possible downgrade on Wednesday.
"The moves in the market in the last couple of days have been a combination of a number of things. You still have inflation stickiness in the UK, that's putting concerns on interest rates. You see Germany slipping into a shallow recession," said Helen Jewell, deputy chief investment officer at BlackRock Fundamental Equities for EMEA.
"The US debt ceiling is headline at the moment - the uncertainty that it is bringing to the markets is incredibly difficult to navigate. On the flip side, what is giving support to markets is the real resilience in earnings and consumers."
European chipmakers gained on Thursday after the world's most valuable chipmaker Nvidia Corp forecast quarterly revenue more than 50% above Wall Street estimates, and said it is boosting supply to meet surging demand for its artificial-intelligence chips
Shares of BE Semiconductor jumped 7.8%, while ASM International rose 7.9% and ASML Holdings added 5.4%. Bank of America analysts see both ASM and ASML as beneficiaries of growing AI adoption.
The wider tech index rallied 2.1%, standing out in a broadly weak market.
Retail stocks fell the most among sectors, down 0.7%, while luxury stocks slipped 0.2% to hit a fresh seven-week low.
Germany's DAX was down 0.2% after data showed Europe's biggest economy economy contracted in the first quarter of 2023, compared with the previous three months, thereby signalling a recession.
European stocks came under selling pressure this week as investors fretted over a potential U.S. debt default and sticky inflation in the UK after a strong earnings season had boosted several regional bourses to record highs.
Cineworld fell 3.6% even as the British cinema chain operator said it expects to emerge from Chapter 11 bankruptcy protection in July.
Reporting by Sruthi Shankar in Bengaluru; Editing by Sherry Jacob-Phillips
Source: Reuters