European AI chip stocks led a rally on Thursday, with investors reacting positively to record earnings from Taiwan Semiconductor Manufacturing Company (TSMC). The pan-European Stoxx 600 opened higher, gaining 0.28% in the first hour, while leading indexes such as the FTSE MIB and FTSE 100 also showed modest gains. Market sentiment was lifted as TSMC reported soaring demand for artificial intelligence chips.

Dutch semiconductor equipment maker ASML saw its shares jump 7% in early trading, reflecting investor enthusiasm following TSMC’s stronger-than-expected fourth-quarter results. Other European chip makers also benefited, with ASM International rising 9.57% and BE Semiconductor gaining 5.63%. TSMC reported a 35% increase in Q4 profits, surpassing forecasts and hitting a record high.

Meanwhile, European banks experienced mixed activity. UniCredit rose 1.1% after dismissing rumors that it planned to acquire a stake in Banca Monte dei Paschi di Siena as “speculative and unjustified.” Analysts predict that mergers and acquisitions could pick up in Italy this year, with MPS seen as a key target. UniCredit emphasized that M&A remains a strategic tool for growth in the banking sector.

Investors were also keeping an eye on geopolitical developments, particularly the ongoing discussions between the U.S., Denmark, and Greenland regarding Arctic sovereignty. While a high-stakes White House meeting ended without agreement, dialogue will continue. Tensions over territorial claims, alongside global economic concerns, are likely to influence market sentiment in the coming weeks.

On the economic data front, the UK reported 0.3% GDP growth for November, above the expected 0.1%, while Richemont, the luxury goods conglomerate, posted 4% year-on-year sales growth in its third quarter. Analysts warn that although short-term growth remains steady, European economic expansion is expected to slow in 2026, with investment confidence remaining subdued.

source: cnbc