European shares log a weekly decline, defence stocks slide

[BENGALURU] European shares slid on Friday (Nov 21) and registered a weekly decline as concerns over stretched tech valuations came to the fore again, while defence stocks weakened amid signs of possible progress toward ending Russia’s war in Ukraine.

The pan-European Stoxx 600 fell 0.3 per cent to 562.1 points, after hitting its lowest since late September earlier in the session. The index logged its biggest weekly drop since late July.

Germany’s DAX, down 0.8 per cent, hit a six-month low earlier. Spain’s IBEX lost 1 per cent.

In the US, tech stocks steadied in choppy trade after dragging markets a day earlier, while sentiment improved as traders boosted bets on an interest rate cut by the Federal Reserve next month following remarks from policymakers.

European tech stocks dropped 2.3 per cent to hit their lowest since mid-September. ASML, ASM International, and BE Semiconductor lost between 4.6 per cent and 6.3 per cent.

Axel Rudolph, senior technical analyst at IG Group, said “the whole day European markets have just been underwater,” attributing that to the drag by tech stocks as worries over sky-high valuations in the US. persisted. US trading was extremely volatile on the day.

AI beneficiaries Schneider Electric and Siemens Energy slid 2.7 per cent and 10.1 per cent, respectively.

Meanwhile, investors were also monitoring developments around a new US-drafted plan to end the Russian war in Ukraine that would involve downsizing Kyiv’s military and major territorial concessions. President Volodymyr Zelenskiy said he would not betray Ukraine’s interests.

Europe’s defence index has been declining since early October and on Friday it fell 3.4 per cent to hit its lowest since August. Renk was down 8.4 per cent and Rheinmetall was off 7.2 per cent.

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An index tracking investor nervousness spiked 2.7 points to 24.56, hitting its highest since mid-May.

Mining stocks declined 1.3 per cent, and industrial stocks lost 1.3 per cent, with Thyssenkrupp falling 9.2 per cent.

Bucking the trend, food and beverage stocks, which investors flock to in times of economic and market uncertainty, rose 2.1 per cent. Healthcare stocks added 0.8 per cent.

“Out of tech into defensive stocks – that’s where investors seem to be heading as uncertainty over Fed policy and inflation keeps markets on edge,” Rudolph added.

Data showed British retail sales tumbled in October alongside weakening household sentiment, while business growth stalled as November’s Purchasing Managers’ Index dropped. UK’s FTSE 100 index, however, edged up 0.1 per cent.

Among others, German ticketing firm CTS Eventim rose 11.8 per cent after it reported strong third-quarter results and appointed a new CFO. REUTERS