European shares flat on Wednesday reflected a tense trading environment as investors across the continent waited for Nvidia’s highly anticipated earnings report—a release many analysts believe could determine the next phase of the global AI-driven market rally. The muted performance followed Tuesday’s steep selloff, raising questions about whether the momentum fueling technology stocks in 2025 has reached a limit.
The pan-European STOXX 600 ended the session unchanged at 561.71, with major national indexes showing slight declines: Germany’s DAX slipped 0.1%, France’s CAC 40 lost 0.2%, and the UK’s FTSE 100 fell 0.5%.
AI Momentum Tested as Nvidia Takes Center Stage
Nvidia’s earnings—expected after the closing bell—have become a symbolic test of investor confidence in artificial intelligence. After months of explosive gains in AI-linked companies, many traders worry valuations may have outpaced fundamentals.
Michael Field, chief equity strategist at Morningstar, noted that the market is trying to determine whether Nvidia’s growth can sustain current valuations or whether the stock has diverged from its intrinsic value.
“AI sentiment isn’t just influencing Wall Street anymore,” he said. “It’s shaping global markets.”
Tech stocks managed to claw back early losses, rising 0.4% by the close.
Defence Stocks Slide Amid U.S.-Led Push on Ukraine War Diplomacy
European aerospace and defence stocks saw the steepest declines of the day. The sector index dropped 2.3%—its lowest point since early September—after signs emerged of renewed diplomatic efforts by the United States to bring the Russia-Ukraine conflict closer to an end.
Major players including Rheinmetall, Renk, BAE Systems, Leonardo, and Saab tumbled between 4.5% and 7.7%.
Utilities shares also dipped 1.4%, while the energy sector declined 0.4%.
Media and Mining Stocks Provide Rare Bright Spots
While multiple sectors struggled, media stocks led gains with a 2% rise, highlighted by Universal Music Group’s 6.2% jump.
Mining stocks followed, climbing 0.8% in response to stronger gold prices. Fresnillo advanced 5.8%, helping lift the sector.
Sage Group rose 1.2% after posting a better-than-expected 16% growth in underlying operating profit.
Nokia Slumps as New Long-Term Goals Disappoint
Nokia dropped 6.9% after unveiling long-term financial targets that fell short of market expectations. Analysts noted that the telecom company faces intensifying competitive pressures within network infrastructure markets.
Luxury group Kering also slid 4.2% as internal memos revealed plans to reduce the company’s reliance on Gucci, including scaling back retail space and increasing cost synergies.
UK Inflation Surprise Fuels Rate-Cut Speculation
A notable macroeconomic development came from the United Kingdom, where inflation slowed for the first time since May. The unexpected cooling reinforced bets that the Bank of England may cut interest rates in December, providing some optimism for heavily indebted households and businesses.
Bond traders priced in a higher likelihood of policy easing, though broader market sentiment remained cautious.
Investors Await U.S. Labour Market Data
Markets also turned attention to the U.S., where labour market data due Thursday could influence expectations ahead of the Federal Reserve’s December meeting. Officials at the Fed remain divided on whether policy should shift toward easing amid global growth uncertainties.
Conclusion: European Shares Flat as Markets Seek Direction
The session closed with European shares flat, reflecting uncertainty ahead of Nvidia’s earnings—an event considered pivotal for the global AI narrative. Defence stocks dragged markets lower, while pockets of strength in media, mining, and select tech names helped offset broader weakness.
As investors weigh inflation trends, geopolitical developments, and the durability of AI-driven valuations, volatility is likely to continue shaping the path forward for European markets.
