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European Stocks Erase Gains as US Data Thwarts Rate-Cut Bets

European stocks lost momentum after US business activity accelerated amid a pickup in inflation that will likely keep Federal Reserve rate cuts at bay.

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The Stoxx 600 Index erased gains fueled by the exuberant reaction overnight to Nvidia Corp.’s sales forecast. In the UK, stocks dipped after Rishi Sunak called a surprise general election for July 4, when many in his Conservative Party were still counting on having months to prepare.

After a good earnings season, the uptrend is still intact for the Stoxx 600 even amid signs of overheating. For now, optimism about the promise of artificial intelligence boom is muting bears, said Lewis Grant, senior portfolio manager for global equities at Federated Hermes Ltd.

“Sentiment is key, and Nvidia’s results continue to fuel exuberance,” Grant wrote in a note. “A healthy dose of realism may be required as investors look for third or fourth-order beneficiaries for AI.”



Image: EU Central Bank