Europe midday: Stoxx up but AI funding worries weigh

(Sharecast News) - European stock markets opened higher on Tuesday despite another Asian tech sell-off over fears about the amount of borrowing by artificial intelligence companies. The pan-regional Stoxx 600 index was up 0.14% at 1152 BST with major bourses higher on the back of a pause in fighting between the US and Iran that saw Brent crude oil slip towards $86 a barrel.

Markets are also awaiting Wednesday's US Federal Reserve decision for clues on the path of interest rates. Economists expect policy makers to hold steady this month.

Asian stock markets fell sharply as investors started offloading chip stocks. The South Korean Kospi dropped more than 10%, with trading halted at one point, and Japan's Nikkei fell more than 4%.

Shares in the chip companies SK Hynix and Samsung Electronics both fell by more than 10%.

Regional tech stocks were also hit on a report China has started making domestic deep‑ultraviolet lithography machines - a technology long dominated by ASML - hitting its shares as a result.

"Momentum in the AI trade is shifting. Although the Nasdaq posted a mild loss on Monday, the world's most valuable company, Nvidia, fell nearly 5%, and is continuing to decline in the pre-market on Tuesday, where it is down a further 1%. The sell-off in Nvidia and the chip space more generally, came after reports that Nvidia will provide $250bn in financing guarantees for the 10 gigawatt OpenAI data centre in Ohio," said XTB research director Kasthleen Brooks.

"This would help the developers to secure construction financing for what is expected to be the world's largest data centre. Reports also suggest that Nvidia could provide another $350bn for chip purchases. The data centre is expected to take 2 years to build. This news highlights two issues for investors right now: 1, the amount of money involved to secure AI infrastructure is getting larger and larger, leading to bubble fears, 2, investors are running out of patience to see these investments pay off."

In other equities news, Unilever jumped after better-than-expected beating second‑quarter sales. LVMH rose 2.5% after reporting a 3% increase in quarterly sales, buoyed by resilient US demand

Mercedes‑Benz was up after posting higher operating profit.

Reporting by Frank Prenesti for Sharecast.com