European tech selloff pushes STOXX 600 lower amid Gulf tensions
The pan-European STOXX 600 fell as a broad semiconductor selloff outweighed gains in lagging sectors like luxury, while fresh attacks in the Gulf pushed oil prices higher and clouded the global economic outlook.
The pan-European STOXX 600 dropped 0.6% to 639.94 points by early morning trading, putting the benchmark on track for a modest weekly decline. Technology stocks led the downward shift, with the sector falling 2.3% as investors rotated out of semiconductors. The selling pressure reflects growing unease over stretched valuations following a strong rally earlier in the year.
Chip equipment makers ASML and ASMI both saw their shares decline more than 4%, while French chip materials supplier Soitec dropped 3.6%. These significant losses materialized even after Dutch giant ASML and Taiwan's TSMC issued upbeat forecasts earlier this week. The disconnect underscores how concerns over stretched valuations, rather than underlying corporate fundamentals, are currently dictating tech sector moves across Europe, Asia, and the United States.
Capital exiting the technology sector is finding a home in areas of the market that have lagged for most of the year. Luxury stocks emerged as a standout, climbing roughly 3% this week on the STOXX 600. The shift suggests investors are hunting for relative value and earnings stability rather than betting on continued high-growth expansion.
Burberry exemplified the mixed fortunes within the resilient luxury sector. The British fashion house reported that its recovery continued through the April-June quarter, driven by robust demand in both the United States and China. Despite this positive momentum, Burberry shares slipped 1.7% as the company noted that the ongoing conflict in the Middle East had dampened tourist spending across Europe.
Outside of the consumer and tech spaces, defense contractor Saab climbed 3.4%. The company posted a stronger-than-expected rise in second-quarter operating profit, fueled by solid demand across its key markets that drove both higher sales and increased order intake. The stock's performance highlights sustained institutional interest in defense contractors amid persistent global instability.
That instability was reinforced by fresh geopolitical developments that added a distinct risk premium to the broader market. Iran announced it had launched new attacks on U.S. facilities in the Gulf, a development that immediately pushed oil prices higher. The escalation compounded existing investor concerns regarding the global economic outlook, offsetting positive momentum in lagging sectors and ensuring a cautious end to the trading week.
