Europe: Stoxx 600 falls for third straight session as tech drags

EUROPEAN shares closed lower for a third straight day on Wednesday (Jul 17), with chip stocks sliding as investors remained wary of potential US-China trade tensions, with a focus now shifting to the European Central Bank’s upcoming rate decision.

The pan-European Stoxx 600 index closed 0.5 per cent lower, touching one-week lows with the technology sub-index falling 4.5 per cent, the biggest single-day drop since December 2022.

Shares of Dutch firm ASML, the biggest supplier of computer chip-making equipment in the world, shed almost 11 per cent, its largest single-day percentage drop in over four years, driven by concerns that US government pressure could lead to tighter restrictions on its exports to China, overshadowing its second-quarter earnings numbers.

Bloomberg News reported that amid resistance from allies to its chip crackdown, the US is considering the most toughest trade restrictions if companies keep providing China with access to advanced semiconductor technology.

Other semiconductor stocks also lost ground. ASM International and BE Semiconductor both fell more than 7 per cent each.

Chris Beauchamp, chief market analyst at IG Group, attributed the fall in chip stocks to “a trifecta of China growth and demand (concerns), the geopolitical situation, and also the fact that these stocks have come quite a way in a very short space (of time)“.

Despite on Wednesday’s losses, the tech index is still up close to 13 per cent for the year, amongst the best-performing Stoxx 600 sectors.

On the data front, eurozone inflation for June stood at 2.5 per cent year on year. The data comes ahead of the European Central Bank’s rate-setting meeting later in the week, where it is widely expected to hold its rates steady.

In the UK, inflation defied forecasts for a slight fall and held at 2 per cent in June. UK’s blue-chip FTSE 100 closed 0.3 per cent up.

Among other stocks, Adidas gained 2.1 per cent after the German sportswear maker increased its full-year earnings forecast after a better-than-expected second quarter. Rival Puma also rose 2.2 per cent.

Roche jumped 5.8 per cent after the Swiss drugmaker said a second drug candidate from its purchase of Carmot Therapeutics yielded positive results in an early-stage trial, asserting itself as a late contender in the race to develop obesity drugs.

Shares of rival Novo Nordisk, Europe’s largest listed company, fell 5.3 per cent.

Danish hearing aid maker Demant dropped 14.8 per cent after cutting its full-year outlook, while Swedish air treatment solutions provider Munters advanced 22.4 per cent after beating expectations on second-quarter profit. REUTERS