STOXX 600 drops for fifth day, Nvidia drags European chip stocks

6:06 am Thursday, November 21st, 2024

By Joao Manuel Vicente Mauricio

(Reuters) -Automobile stocks led losses in Europe on Thursday, with geopolitical tensions weighing on overall market sentiment and keeping some safe-haven bids afloat, while chip stocks took a hit after sector bellwether Nvidia’s disappointing forecast.

The pan-European STOXX 600 index was down 0.6%, as of 0930 GMT, on track for its fifth straight session of declines amid uncertainties around the escalating Ukraine-Russia conflict.

“It doesn’t feel like the (Ukraine-Russia) story has developed sufficiently for there to be a marked risk-off … But it’s just going to keep investors cautious whilst we wait for any further developments,” said Fiona Cincotta from Citi index.

Safe-haven bids have been on the rise, with gold , the Swiss franc and the dollar edging up on the day.

Despite hitting record highs earlier this year, the STOXX 600 has sharply fallen behind its U.S. counterpart S&P 500 in 2024, also dented by likely domestic impacts of Donald Trump’s U.S. presidential victory, concerns over Chinese spending and the euro zone’s economic woes.

While an ECB policymaker said tariff hikes under Trump do not shift Europe’s inflation outlook, a Federal Reserve official noted it is too early to start assessing the election impact on monetary policy.

Auto was the worst-hit sector, down 1% and on track for the top weekly laggard. Analysts have highlighted the sector is in line to be hit hard by any potential trade tariffs from Trump. Wage talks at Volkswagen were also under investors’ radar.

European chip stocks ASML and BE Semiconductor were down 1% each, with the world’s largest company by market value, Nvidia, forecasting its slowest revenue growth in seven quarters.

“There is still optimism surrounding the sector … It’s not that we’ve seen anything really disastrous,” Cincotta added.

The AI chip leader’s shares were down 4% in U.S. premarket trading.

However, Soitec jumped 18% after the French semiconductor materials supplier’s half-year results, limiting the tech sector’s losses.

CTS Eventim slumped 10% following the German ticketing group’s nine-month results, while JD Sports Fashion slid 15% after the sportswear retailer warned that its annual profit would come in at the low end of its guided range.

On the flip side, the insurance sector was the only sectoral gainer, boosted by a 2% rise in Zurich Insurance after the company’s upbeat three-year targets, and a 3% rise in Poland’s PZU following third-quarter results.

Halma was up 9%, as the health and safety device maker reported its half-year results.

(Reporting by Ankika Biswas in Bengaluru and Joao Manuel Mauricio in Gdansk; Editing by Rashmi Aich and Maju Samuel)