Tech selloff weighs on European shares ahead of ECB meeting next week

A GLOBAL rout in tech stocks dragged Europe’s equity benchmark slightly lower on Friday (Jul 17), leaving investors on edge as they prepare for next week’s European Central Bank meeting and corporate earnings.

The pan-European Stoxx 600 index fell 0.34 per cent to 641.53 points. It was largely unchanged for the week.

A rise in oil prices stemming from the escalating Middle East conflict, and lacklustre reaction even to strong earnings this week, have complicated the market backdrop.

Investors had hoped that solid results would direct attention away from geopolitics and towards corporate fundamentals, potentially providing momentum for equities.

However, tech stocks slipped 3.27 per cent this week even after ASML, the dominant supplier of equipment needed to make high-tech computer chips, raised its 2026 sales forecasts.

The subdued reaction underscores the high bar companies have to clear to lure investors into equities, at a time when sentiment towards major AI winners has soured and uncertainty over inflation persists.

The tech-heavy Nasdaq dropped 0.98 per cent. Taiwanese equities, a major AI beneficiary in the emerging market universe, dropped 6.47 per cent.

War rages on in Middle East

Meanwhile, the US struck bridges and an airport in Iran on Friday, while Teheran responded by hitting a power and desalination plant in Kuwait, one of the Gulf countries that host US airbases.

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“There is clearly a real disconnect between what Iran believes it can achieve and what the US wants. That is causing some dissonance in markets,” said Steven Schoenfeld, CEO of MarketVector Indexes.

Focus turns to ECB next week

Rising energy prices have also sharpened the focus on the European Central Bank, which is widely expected to keep interest rates unchanged on Jul 23. Investors still expect a second rate hike later this year.

Utilities stocks rose 1.55 per cent and were the biggest gainers on the European benchmark on Friday, while luxury were the best-performing sector for the week.

Britain’s Burberry slipped 6.38 per cent after the luxury group said the Middle East conflict had weighed on tourist spending in Europe.

Saab rose 9.73 per cent after the Swedish defence and aerospace group reported a bigger-than-expected increase in second-quarter operating profit.

Among other top movers, Norwegian recycling technology company Tomra Systems jumped 11.87 per cent after upbeat quarterly results, while Swedish tech company Lagercrantz slid 7.09 per cent on downbeat quarterly core earnings.

Volvo Group dipped 0.64 per cent even after the Swedish truckmaker reported a 35 per cent jump in second-quarter profit.

Private equity firm EQT gained 11.02 per cent. Australia’s Perpetual rejected a sweetened A$2.5 billion (US$1.75 billion) takeover proposal from the Swedish company. REUTERS