Instant view: European shares sail to record high

LONDON (Reuters) - European shares rose to a record high on Thursday, lifted by a rally in global stocks that also saw Japan's blue-chip Nikkei index hit an all-time high.

Europe's broad STOXX 600 index rose to 495.81 points, surpassing the 495.46 reached in Jan. 2022, as unexpectedly strong revenue forecasts from U.S. chip giant Nvidia lifted sentiment around the world.

The STOXX 600 index was last up around 0.5% on the day.

In Asia, Japan's Nikkei rose to a record high earlier on Thursday.

SAMY CHAAR, CHIEF ECONOMIST, LOMBARD ODIER, GENEVA:

"The share rally is a global a phenomenon but Europe is part of it. When you think about the improvement in the growth picture, and the stabilization of some sectors or economies it’s not like we’ve got the situation last year with U.S. exceptionalism and the rest doing poorly, actually we are seeing a bottoming process everywhere."

"Germany might be an exception, but the rest of Europe is recovering."

ANEEKA GUPTA, EQUITY ANALYST, WISDOMTREE, LONDON:

"The economic data is so much weaker in the euro zone compared to the U.S. and we’re hitting all-time highs. We’re seeing a bit of a discrepancy. I think it really boils down to a lot more positive sentiment after Nvidia’s earnings… and that optimism is being reflected in European markets."

"A combination of inflation making quite a bit of progress given the monetary tightening (and) the expectations of the ECB cutting ahead of the Fed, going as early as April, is really helping equity market sentiment at this moment in time."

"I think we’ve reached a point where there is room for correction in equity markets. What is going to trigger that correction is very hard to determine. What could keep the rally going is just the optimism of growth-oriented sectors. If you just reflect on the earnings results (in Europe so far), earnings per share growth is down 11%, that clearly doesn’t match with an equity performance at an all time high…. Yet equity markets are forward looking and are anticipating the relief from those rate cuts."

KATHLEEN BROOKS, RESEARCH DIRECTOR, XTB, LONDON:

"Nvidia seems to have triggered another leg higher in global stocks, with the Eurostoxx and Nikkei both setting all time records. Nvidia is driving the overall market, and not just in the US. The AI theme is also driving demand for tech stocks, and Europe's broader 600 index has seen its tech sector almost match the Magnificent 7's performance in recent months. This is one reason why the Eurostoxx index has been moving in the same direction as the S&P 500 since October. In contrast, the FTSE 100 is a laggard."

"It's no surprise that on the day that the Eurostoxx has hit a record high, the index is led by ASML, anything that touches AI is gold at the moment. After the Nvidia results, any fears about AI slowing down or not being the 'revolution' some thought it was have been put to bed and this is beneficial for stock markets globally, not just in the US."

TREVOR GREETHAM, HEAD OF MULTI-ASSET, ROYAL LONDON, LONDON:

"This is not about the ECB or the strength of the euro zone consumer. Stock markets are very global and many of the companies listed in Europe are global companies."

"What’s happening is we are seeing some quite positive green shoots of (global) growth picking up. A lot of people including myself thought we would be in a recession by now, and while things still aren’t great outside of the U.S. it looks like (global) business confidence is starting to rise, new orders are picking up, we are expecting global growth to get a bit stronger and Europe is catching some of that sentiment."

NATHAN SWEENEY, CHIEF INVESTMENT OFFICER OF MULTI-ASSET, MARLBOROUGH, LONDON:

"Europe is trading on cheap valuations, and we are expecting continued revenue growth from the GRANOLAS—a moniker to reflect the 11 largest companies by market cap, which includes GSK, Roche, ASML, Nestle, Novartis, Novo Nordisk, L'Oreal, LVMH, AstraZeneca, SAP and Sanofi."

"Inflation doesn't need to be 2% for rate cuts to come through, so we expect rate cuts this summer, which will boost corporate earnings."

"Additionally, China is now turning a corner, which will lift exports from Europe."

FIONA CINCOTTA, SENIOR FINANCIAL MARKET ANALYST, CITY INDEX, LONDON:

"(Today’s gains) are obviously a result of the AI optimism which stemmed from the Nvidia results, they were probably the most keenly awaited results of all time and they really didn’t disappoint."

"That fueled expectations around this AI rally that we’ve been seeing across the end of 2023 and start of 2024. Not only have we got this optimism around AI, there are expectations that the ECB and Fed at some point will start cutting interest rates and that does support the upbeat mood."

"U.S. futures are surging higher, we saw the Nikkei trading at all time highs, this is part of a global story, it's not European centric."

(Reporting by the Markets Team; Editing by Dhara Ranasinghe)