European Stocks Edge Higher Amid Oil Price Drop and Await Nvidia Earnings

European stocks were relatively stable on Wednesday as investors awaited Nvidia's second-quarter earnings report. The pan-European STOXX 600 index was up 0.06% at 656.87, with luxury stocks leading sectoral gains, up 1.2%. Investors are looking for clues on whether the AI-driven spending boom can continue to justify lofty market expectations.

Nvidia is expected to forecast an 82.8% rise in third-quarter sales to $104.20 billion. Adjusted gross margin for the second and third quarters is expected to remain around 75%. Tech shares fell 1.1% ahead of the results, as investors await Nvidia's earnings.

The price of Brent crude futures dropped more than 2% to around $86 a barrel on prospects of increased oil flows through the Strait of Hormuz. This helped drive bond yields lower and weighed on the energy index, which fell 1.2% and was the worst performing sector on the STOXX 600.

Kathleen Brooks, research director at XTB, noted that 'we've got a lot of risk coming up' and that European markets will be indirectly affected by Nvidia's results and Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole symposium.