European shares closed lower for a third straight day on Wednesday, with chip stocks sliding as investors remained wary of potential US-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 per cent lower, touching one-week lows with the technology subindex 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 more than 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 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.
Dublin
Dublin’s Iseq index was marginally down in keeping with elsewhere. Travel software group Datalex fell 7 per cent to 44 cent in advance of results and an annual general meeting on Thursday. Datalex shareholders have been urged by a leading advisory firm to vote against the company’s remuneration report at its AGM, after its new chief executive received a $238,928 (€219,800) sign-on bonus and stock options that activate sooner than normal. Ryanair was down 1 per cent at €16.98. Hotel group Dalata was also down by 1.3 per cent to €4.10.
Europe
On the data front, euro zone inflation for June stood at 2.5 per cent year-on-year. The data comes in advance 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 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.
London
Britain’s FTSE 100 closed higher on Wednesday as geopolitical risks drove gains in defensive sectors such as healthcare and consumer goods, while stronger-than-expected UK inflation data eased bets of rate cuts from the Bank of England (BoE).
The blue-chip FTSE 100 index rose 0.3 per cent, recovering from losses of as much as 0.4 per cent earlier in the session.
Rattling global investors, US presidential candidate Donald Trump questioned US support for Taiwan, adding to concerns raised by the report that Washington was mulling tighter curbs on the export of advanced semiconductor technology to China.
Technology stocks across the globe took a hammering but the defensive stocks that investors flock to during times of economic uncertainty rose.
British consumer prices data showed that inflation held at 2 per cent, defying forecasts of a slight fall, adding to uncertainty around when the BoE would start its monetary policy easing cycle.
Energy stocks gained 0.8 per cent, tracking gains in oil prices which rose against a weaker dollar and a report that showed decline in US oil stockpiles. Antofagasta fell 6.1 per cent after the Chilean miner said it expects full-year copper output at the lower end of its guidance range.
New York
The Nasdaq tumbled more than 2 per cent to a two-week low on Wednesday, pulled down as megacap chip and tech stocks fell on the prospect of tighter China-focused US trade curbs, while the Dow bucked the trend and jumped to a record high.
The Philadelphia SE Semiconductor index spiralled 4.9 per cent to a two-week low, and the tech-heavy Nasdaq went on pace for its worst day since December 2022.
AI-chip favourite Nvidia fell 6.2 per cent, while ASML’s US-listing slumped 11.4 per cent.
However, the Dow rose to touch an intraday record high supported by Johnson & Johnson, which gained 3.3 per cent after a second-quarter results beat. – Additional reporting by Reuters
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