European equities muted as tech valuation concerns linger; UK markets outperform
EUROPEAN shares were little changed on Wednesday with losses in technology stocks offsetting strong performance from basic resources amid lingering concerns over sky-high, AI-fuelled tech valuations.
UK markets, meanwhile, advanced after inflation data firmed rate cut bets.
The pan-European Stoxx 600 closed flat at 579.79, after trading close to record highs during the day.
Major regional bourses were mixed, with the UK’s FTSE 100 adding 0.9 per cent while Germany’s DAX and France’s CAC 40 dipped 0.5 per cent and 0.3 per cent, respectively. British consumer price inflation fell unexpectedly sharply in November, data showed, prompting investors to add to bets for an interest rate cut on Thursday.
Banks were a big boost to the Stoxx 600, up 1 per cent and trading close to levels last seen in 2008. London’s HSBC added 2.7 per cent after hitting a record high earlier with traders pointing to a broker rating upgrade on the stock.
“For the next year, we remain constructive on equities globally. We have diversified our portfolio, because we think it’s important not to be too concentrated on US tech,” said Amelie Derambure, senior multi-asset portfolio manager at Amundi.
“Monetary policy is going to be supportive or neutral, we don’t believe there will be hikes in most developed countries ... and we expect a tailwind coming from the fiscal support in Germany.”
Mining stocks were the biggest gainers, rising 1.1 per cent after silver prices hit a record high and gold bullion prices also inched up.
Commodity-linked stocks traded higher, with energy firms tracking a rise in oil prices after the US ordered a blockade on sanctioned oil vessels in Venezuela. Shell and BP both gained.
Tech shares fell 1.7 per cent with semiconductor companies ASML Holdings, BESI and ASMI in the red.
Construction and materials and automobiles also came under pressure.
The Stoxx 600 has rallied nearly 15 per cent this year, aided by falling interest rates across the continent and global investors diversifying away from premium-valued US tech stocks.
Several monetary policy decisions are on the radar this week, including those by the European Central Bank (ECB), Sweden’s Riksbank, Bank of England, and Norway’s Norges Bank.
Among individual stocks, London-based Bunzl fell 2 per cent after the business supplies distributor forecast a slight year-on-year drop in its 2026 operating margin.
Serco topped the Stoxx 600 with a 7.4 per cent gain after the outsourcing firm forecast profit ahead of analyst expectations for this year and next. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
