European equities reverse course as tech giants signal headwinds
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European equity markets opened lower on Wednesday, retreating from a strong start to the week as investor sentiment deteriorated following profit warnings from major global tech players. The STOXX Europe 600 index slipped 0.9% by early trade, pressured by broad-based weakness in the technology sector, which led losses with a 3.2% decline.
The sharp pullback was triggered by fresh geopolitical and regulatory shocks reverberating through the semiconductor industry. Nvidia revealed it will take a $5.5 billion charge linked to newly imposed U.S. export controls on its AI chips to China, underscoring the direct impact of rising trade barriers on revenue visibility and market access. Meanwhile, ASML, Europe’s flagship chip equipment maker, issued a stark outlook warning, citing escalating tariff-related uncertainty that could affect business volumes into 2025 and 2026. Its shares dropped over 7%, weighing heavily on both the Dutch AEX and the broader tech segment.
National indices followed suit: Germany’s DAX declined by 0.99%, France’s CAC 40 shed 0.84%, while Spain’s IBEX and the UK’s FTSE 100 also posted moderate losses between 0.3% and 0.8%. The negative sentiment marks a shift from the previous two sessions of gains, with traders now re-pricing earnings expectations and reassessing macro risks tied to ongoing U.S.–China trade friction and its spillover into European corporates.
Investor anxiety is compounded by the deteriorating earnings outlook across the continent. Analysts polled by LSEG IBES now forecast a 3% contraction in Q1 profits for European firms, down from the -2.2% projection just a week prior. The adjustment reflects both margin compression and revenue disruption stemming from geopolitical instability and weakening demand in China, a key market for European industrial and tech exporters.
All eyes now turn to the European Central Bank’s upcoming policy decision on Thursday. Markets widely expect a 25 basis point rate cut, with the ECB likely to emphasize downside risks to growth stemming from global uncertainty and persistent market volatility.
Operationally, traders should monitor the interplay between central bank guidance and corporate earnings revisions, especially within the export-sensitive sectors. The outlook for European equities in the near term remains tightly bound to geopolitical developments, with the technology segment particularly exposed to policy swings from Washington and Beijing.
The sharp pullback was triggered by fresh geopolitical and regulatory shocks reverberating through the semiconductor industry. Nvidia revealed it will take a $5.5 billion charge linked to newly imposed U.S. export controls on its AI chips to China, underscoring the direct impact of rising trade barriers on revenue visibility and market access. Meanwhile, ASML, Europe’s flagship chip equipment maker, issued a stark outlook warning, citing escalating tariff-related uncertainty that could affect business volumes into 2025 and 2026. Its shares dropped over 7%, weighing heavily on both the Dutch AEX and the broader tech segment.
National indices followed suit: Germany’s DAX declined by 0.99%, France’s CAC 40 shed 0.84%, while Spain’s IBEX and the UK’s FTSE 100 also posted moderate losses between 0.3% and 0.8%. The negative sentiment marks a shift from the previous two sessions of gains, with traders now re-pricing earnings expectations and reassessing macro risks tied to ongoing U.S.–China trade friction and its spillover into European corporates.
Investor anxiety is compounded by the deteriorating earnings outlook across the continent. Analysts polled by LSEG IBES now forecast a 3% contraction in Q1 profits for European firms, down from the -2.2% projection just a week prior. The adjustment reflects both margin compression and revenue disruption stemming from geopolitical instability and weakening demand in China, a key market for European industrial and tech exporters.
All eyes now turn to the European Central Bank’s upcoming policy decision on Thursday. Markets widely expect a 25 basis point rate cut, with the ECB likely to emphasize downside risks to growth stemming from global uncertainty and persistent market volatility.
Operationally, traders should monitor the interplay between central bank guidance and corporate earnings revisions, especially within the export-sensitive sectors. The outlook for European equities in the near term remains tightly bound to geopolitical developments, with the technology segment particularly exposed to policy swings from Washington and Beijing.