Tech weakness pressures EU equities as chip sector faces new headwinds
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European equities opened lower on Wednesday, weighed down by pronounced weakness in the technology sector following disappointing earnings from ASML and renewed US export restrictions on semiconductors. The pan-European STOXX 600 fell 0.9% in early trading, with the technology-heavy SX8P index leading the decline, down 2.7%, while defensive sectors provided limited downside cushion.
ASML, Europe’s largest supplier of semiconductor manufacturing equipment, missed net booking estimates for the first quarter and warned that ongoing tariff uncertainty is clouding its forward outlook. Despite maintaining its annual guidance, investors responded with caution, sending the stock down more than 5.3% in morning trade. The company’s comments, in conjunction with fresh US curbs affecting Nvidia's chip exports to China, reignited concerns over sector-specific geopolitical risk and the fragility of global semiconductor supply chains.
The ripple effect from ASML and Nvidia pressured broader tech sentiment across Europe, dragging down major indices. France’s CAC 40 and Germany’s DAX both declined 0.8% and 0.9% respectively, while the UK’s FTSE 100 shed 0.5%. Defensive sectors, including utilities, telecoms, and food & beverages, managed to stay in positive territory, reflecting investor rotation into lower-beta areas amid elevated macro uncertainty.
Wall Street futures also pointed lower ahead of a pivotal speech by Fed Chair Jerome Powell and ongoing trade discussions between the US and major Asian partners, particularly Japan. Market participants are closely watching for any signals on monetary policy recalibration or clarity on trade relations, especially as tariff dynamics continue to roil supply chains and equity valuations.
The combination of disappointing earnings, elevated geopolitical risk, and fragile investor sentiment underscores the growing pressure on cyclical sectors, especially tech, to deliver under increasingly adverse macro conditions. For now, attention will remain fixed on incoming corporate results, central bank commentary, and geopolitical developments that could influence capital flows and sector rotations across global markets.
ASML, Europe’s largest supplier of semiconductor manufacturing equipment, missed net booking estimates for the first quarter and warned that ongoing tariff uncertainty is clouding its forward outlook. Despite maintaining its annual guidance, investors responded with caution, sending the stock down more than 5.3% in morning trade. The company’s comments, in conjunction with fresh US curbs affecting Nvidia's chip exports to China, reignited concerns over sector-specific geopolitical risk and the fragility of global semiconductor supply chains.
The ripple effect from ASML and Nvidia pressured broader tech sentiment across Europe, dragging down major indices. France’s CAC 40 and Germany’s DAX both declined 0.8% and 0.9% respectively, while the UK’s FTSE 100 shed 0.5%. Defensive sectors, including utilities, telecoms, and food & beverages, managed to stay in positive territory, reflecting investor rotation into lower-beta areas amid elevated macro uncertainty.
Wall Street futures also pointed lower ahead of a pivotal speech by Fed Chair Jerome Powell and ongoing trade discussions between the US and major Asian partners, particularly Japan. Market participants are closely watching for any signals on monetary policy recalibration or clarity on trade relations, especially as tariff dynamics continue to roil supply chains and equity valuations.
The combination of disappointing earnings, elevated geopolitical risk, and fragile investor sentiment underscores the growing pressure on cyclical sectors, especially tech, to deliver under increasingly adverse macro conditions. For now, attention will remain fixed on incoming corporate results, central bank commentary, and geopolitical developments that could influence capital flows and sector rotations across global markets.