European stocks rise as STMicroelectronics' forecast lifts tech stocks
Market Overview and Key Drivers
By Johann M Cherian and Utkarsh Hathi
June 2 (Reuters) - European shares rose on Tuesday as a strong forecast from chipmaker STMicroelectronics lifted technology stocks, while investors awaited a key inflation report later in the day for insights into how the Mideast conflict has affected the euro zone economy.
STMicroelectronics and Technology Sector Performance
The pan-European STOXX 600 index rose 0.9% to 627.06 points by 0806 GMT. Technology stocks led sectoral gains with a 2.6% rise.
Chipmaker STMicroelectronics' Impact
Chipmaker STMicroelectronics rose 7.9% to hit €63.9, its highest since September 2000, after lifting revenue targets for its data centre business, signalling strong demand from the AI boom.
AI-Related Stocks and Sector Sentiment
Other AI-related stocks such as Infineon and Schneider Electric added 5.1% and 2%, respectively.
"Semiconductors are probably no longer merely a traditional technology sector. They are gradually becoming the central infrastructure of tomorrow's global economy," said John Plassard, partner, head of investment strategy at Cité Gestion.
"The real question may therefore no longer be whether the cycle will eventually end, but rather how long this global AI supercycle can continue before markets genuinely begin to anticipate its conclusion."
Geopolitical Developments and Market Sentiment
Lebanon announced a partial ceasefire between Hezbollah and Israel on Monday following a brief escalation of hostilities, which also aided risk sentiment.
Energy Market Movements
Crude prices eased more than 1% as investors pinned hopes on U.S. President Donald Trump's remarks that talks with Iran were ongoing, despite a report saying that Tehran had suspended indirect negotiations with Washington.
Still, at $93 a barrel, energy prices will likely remain painful, analysts said.
Upcoming Economic Data and Central Bank Outlook
A report on euro zone consumer inflation, due later in the day, is expected to show consumer prices rose 3.2% in May on an annual basis from the month before.
Traders expect the European Central Bank to hike interest rates by 25 basis points when it meets next week, according to data compiled by LSEG.
Company-Specific Movers
Among others, Prosus shares rose 10% after EU antitrust regulators said on Monday the Dutch tech investor has been given more time to comply with its pledge to sell down its stake in Delivery Hero.
Abivax slumped 32% after the French drugmaker published the late-stage trial results for its inflammatory bowel drug.
British American Tobacco slipped 3.6% after the Dunhill cigarette maker flagged volume weakness in the heated tobacco and cigarette industry.
Trade Policy Developments
Meanwhile, a European Parliament committee voted to remove EU import duties on many U.S. goods, a step towards complying with the trade deal agreed with the United States last year.
(Reporting by Utkarsh Tushar Hathi and Johann M Cherian in Bengaluru; Editing by Janane Venkatraman)
