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

Wee

Quarterly earnings from AI darling Nvidia ( NVDA ) is

Wednesday's marquee event for markets, with much riding on the

chipmaker to deliver results that could placate investors who

are questioning hefty spending in artificial intelligence.

Investors have begun second-guessing U.S. tech giants since

Chinese startup DeepSeek rattled the industry with AI technology

ostensibly cheaper yet as capable as that of early leaders.

Market estimates have Nvidia's ( NVDA ) fourth-quarter sales at $38.5

billion and first-quarter guidance around $42.5 billion.

As usual, options point to a share price move of around 8%

in either direction should the results surprise.

"This earnings report isn't just about Nvidia ( NVDA )... It's about

whether the AI revolution can maintain its breakneck pace," said

Saxo's global head of investment strategy, Jacob Falkencrone.

Alleviating concern of DeepSeek triggering a slide in AI

chip demand, sources have told Reuters of Chinese companies

increasing orders for Nvidia's ( NVDA ) H20 chip due to booming demand

for low-cost AI models.

DeepSeek itself is accelerating the launch of the successor

to the R1 model that put the startup on the map last month,

three people familiar with the company told Reuters.

R2 is likely to worry the U.S. government which regards AI

leadership as a national priority.

That country's technology war with China is set to intensify

with the administration of President Donald Trump planning

tougher restrictions on semiconductor exports to China.

Trump has already signed a memorandum restricting Chinese

investment in the U.S. in strategic areas.

Over in China, a government official on Wednesday said

Taiwan sought to give the island's semiconductor industry to the

U.S. as a "souvenir" for use as leverage when seeking support

from Washington.

Still, investors seemed to have brushed off escalating

tension for now. The share prices of Hong Kong-listed companies

jumped 2.5% on Wednesday with technology stocks

surging 3.7%, having declined in the previous session.

Shares in mainland China similarly rose.

Elsewhere, U.S. Treasury yields rebounded from their weakest

level in months after the Republican-controlled U.S. House of

Representatives advanced Trump's $4.5 trillion tax-cut plan,

giving his 2025 priorities a major boost.

A darkening economic outlook continued to linger in investor

minds as they increased bets of more interest rate cuts this

year from the Federal Reserve.

Fed funds futures point to more than 50 basis points worth

of easing priced in by year-end, up from about 40 bps a week

ago. That in turn undermined the dollar on Wednesday.

Key developments that could influence markets on Wednesday:

* Nvidia ( NVDA ) earnings

* Federal Reserve's Tom Barkin, Raphael Bostic speak