Europe’s STOXX 600 falls for third straight session as tech drags

12:36 pm Wednesday, July 17th, 2024

By Shristi Achar A, Pranav Kashyap and Shashwat Chauhan

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

The pan-European STOXX 600 index closed 0.5% lower, touching one-week lows with the technology sub-index falling 4.5%, 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%, its largest single-day percentage drop in over four years, driven by concerns that U.S. 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 U.S. 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% 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 Wednesday’s losses, the tech index is still up close to 13% for the year, amongst the best-performing STOXX 600 sectors.

On the data front, eurozone inflation for June stood at 2.5% 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. [0#ECBWATCH]

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

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

Roche jumped 5.8% 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%.

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

(Reporting by Shristi Achar A, Pranav Kashyap and Shashwat Chauhan in Bengaluru; Editing by Varun H K, Shounak Dasgupta and Tasim Zahid)