European stock exchanges rose - STOXX 600 approached a record level

European stock markets showed positive momentum on Wednesday. The pan-European STOXX 600 index rose 0.4%, approaching a record high. The gains were supported by a strong third-quarter corporate earnings season and signs in the US that demand for artificial intelligence infrastructure remains intact.

Among the region's leading indices, Germany's DAX gained 0.9%, France's CAC 40 rose 0.7%, and London's FTSE 100 advanced 0.8%.

Most companies in the index have already released their quarterly results. Strong financial positions have helped companies partially offset the impact of recent volatility in global bond and energy markets. This, in turn, has given investors greater confidence to maintain capital in European equities.

Demand for the AI sector drives gains in European tech stocks

The technology sector was one of the main drivers of Wednesday's rally. Investor sentiment was boosted by better-than-expected financial results from US cloud services provider CoreWeave.

The company is considered one of the key indicators of the large-scale capital spending needed to build out global AI infrastructure. Recently, CoreWeave has been at the center of investor concerns, as its growing debt and the sustainability of its investments in AI data centers raised questions.

However, the company reported higher-than-expected revenue in the third quarter along with strong demand for cloud services, which partly eased fears of a slowdown in AI infrastructure investment.

The positive sentiment also spilled over into the European semiconductor and enterprise software sectors. Shares of BE Semiconductor and ASM International rose more than 4%, while securities of ASML and STMicroelectronics gained more than 3%.

US inflation and expectations of a 0.5 percentage point Fed rate hike

European investors were also weighing the higher-than-expected US October Consumer Price Index (CPI) data released on Tuesday.

The inflation figure diminished hopes that financial conditions in the US and Europe would ease in the near term. The market has strengthened its expectations that the Fed will raise interest rates by at least 0.25 percentage points at its December meeting.

At the same time, the persistent rise in core inflation and last week's strong US labor market data led some investors to consider the possibility of even more aggressive tightening. Specifically, a scenario is being discussed in which the Fed could raise rates by 0.5 percentage points to cool strong demand in the US economy.

Oil prices rise as investors await Lagarde's remarks

On Wednesday, oil prices began recovering from the two-month lows recorded in the previous trading session. Conflicting expectations were at play in the market: on one hand, investors were weighing the possibility of a diplomatic de-escalation of the conflict between the US, Israel, and Iran; on the other hand, the risk of supply disruptions increased following new attacks on trade vessels in the Strait of Hormuz.

Later in the day, European Central Bank (ECB) President Christine Lagarde is set to make a statement. Investors will be closely watching her comments to assess how the ECB plans to deal with slowing economic growth in Europe, volatility in energy prices, and rising inflationary pressure in the US.