Europe: Shares drop as chipmakers, Mideast fears weigh
EUROPEAN shares fell on Wednesday, dragged by a drop in shares of chipmakers and British drugmaker AstraZeneca, while increasing concerns over an escalation in the Middle East conflict further weighed on sentiment.
The pan-European Stoxx 600 index was down 1.1 per cent, its lowest level in over a week.
A strike on a Gaza hospital that killed hundreds of Palestinians raised the stakes for US President Joe Biden’s visit to Israel.
ASML Holding lost 3.4 per cent as the semiconductor equipment maker reported lower-than-expected orders and warned of flat sales next year.
Shares of other chipmakers such as ASM International, Aixtron and BE Semiconductor also shed between 0.8 per cent and 4.5 per cent, dragging Europe’s technology sector down 2.2 per cent.
“Today, the disappointing (semiconductor) results are going to be the one dominating the news because it’s a big and important sector for Europe,” said Anthi Tsouvali, multi-asset strategist at State Street Global Markets.
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“In general, earnings expectations remain high and they seem to be very optimistic for a region which is an energy importer. If energy prices continue to climb higher, that’s going to be an issue.”
The burgeoning uncertainty over the Middle East war, a slew of mixed earnings reports and a jump in bond yields after better-than-expected US economic data have kept European shares under pressure this week.
The Euro Stoxx volatility index hit its highest intra-day level since March.
Shares of AstraZeneca cashed 5.8 per cent after a data abstract on its experimental precision drug’s use in lung cancer patients in a late-stage trial disappointed some analysts.
Adding to the declines, data showing hotter-than-expected British consumer inflation pushed the FTSE 100 down 1.1 per cent.
The energy sector was the only gainer among major sectoral sub-indexes, up 0.3 per cent as risks to supply from the Middle East boosted crude prices.
Basic resources led losses among the sectors, down 2.7 per cent, dragged by 3.9 per cent drop in ArcelorMittal as Bofa downgraded the world’s second-largest steelmaker to “neutral” on waning demand.
Industrials were a big drag, down 2.0 per cent with ABB dropping 6.5 per cent after the Swiss engineering group dampened expectations for the fourth quarter.
Among other stocks, Adidas added 3.2 per cent after the sportswear firm lifted its revenue forecast and cut its expected loss for 2023. The upbeat outlook also lifted shares of rival Puma by 1.5 per cent.
Italy’s Nexi jumped 13.2 per cent to the top of Stoxx 600 after a source close to CVC Capital Partners said a potential bid for the payments firm is one of several options being studied. REUTERS
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