A look at the day ahead in European and global markets from Tom

Westbrook

Europe's most valuable company and the top supplier of

chip-making equipment reports on Wednesday with the AI rally

getting some speed wobbles.

ASML is the only maker of EUV lithography systems,

the huge $300 million machines needed to produce the tiny

circuitry on cutting-edge chips.

It is set to report an 8.8% rise in second-quarter net

profit at 2.61 billion euros ($2.99 billion) on a 14% increase

in revenue at 8.8 billion euros, LSEG estimates showed. Analysts

are also looking for an increase to the company's full-year

revenue forecast currently at 36 billion to 40 billion euros.

The market mood is such that only a big beat will do, with

IBM ( IBM ) the latest illustration of how AI is upending

business models in software and computing and how fickle markets

are turning about picking the boom's winners and losers.

IBM SHEDS A QUARTER OF ITS VALUE

"Big Blue" said it had failed to keep pace with the shift in

corporate spending from software to data-centre infrastructure.

A projected revenue rise of just 1% put its adjusted

earnings-per-share forecast at $2.93 compared with market

expectations of $3.02. The result sent IBM's ( IBM ) shares down 25%.

South Korea's volatile KOSPI shot up 8% in Asia,

with a surprise slowdown in U.S. inflation cooling bets on

interest rate hikes and giving investors a reason to be

cheerful.

Brent crude futures kept over $85 a barrel, though

stayed short of fresh peaks as investors wait to see how long

the Strait of Hormuz will again be blocked to oil tankers.

Data showed China's economic growth slowed to 4.3% in the

first half, short of economists' expectations. Still, there was

little reaction, since the theme of export strength and domestic

weakness are well worn and because investors hope the slowdown

will prompt a bit of a fiscal impulse.

The Bank of Canada is widely expected to hold interest rates

steady later on Wednesday.

Key developments that could influence markets on Wednesday:

* Earnings: ASML, BNY, Blackrock, Johnson & Johnson, Morgan

Stanley, United Airlines

* Economics: Eurozone industrial production, U.S. PPI

* Interest rates: Bank of Canada seen holding rates

($1 = 0.8744 euros)