Europe: Shares end marginally lower as ASML weighs on tech stocks

EUROPEAN shares closed a touch lower on Wednesday after a warning from Dutch chip company ASML weighed down technology stocks, while a rise in shares of insurers limited overall declines.

The pan-European Stoxx 600 index fell 0.1 per cent but was still hovering around its 14-month highs. Hawkish comments by European Central Bank officials signalling more rate hikes also weighed on sentiment.

ECB’s chief economist Philip Lane on Tuesday backed a further interest rate increase at the ECB’s next meeting but said its size would depend on incoming data, while earlier that day Goldman Sachs raised its terminal rate forecast for the ECB to 3.75 per cent from 3.5 per cent.

“The ECB is the one central bank throughout the last three months that has been very stern on its rate path and where they expect it to go... we’ve seen unanimous responses starting with Lagarde all the way through the committee showing that hawkish stance,” said Daniela Hathorn, senior market analyst at Capital.com.

Rate-sensitive real estate and technology shares were down 1.0 per cent and 1.9 per cent respectively.

Tech stocks touched their lowest level in three weeks, after shares of ASML Holding NV fell 3.7 per cent as it noted some signs of caution among customers, overshadowing a strong quarterly showing.

Other chipmakers ASM International, BE Semiconductor and Aixtron fell between 1.8 per cent and 4 per cent.

Data showed euro zone inflation eased last month but underlying readings remained stubbornly high, raising worries at the ECB about the persistence of price pressures.

Separately, a report showed Britain now has western Europe’s highest rate of consumer price inflation, despite falling to 10.1 per cent in March from February’s 10.4 per cent.

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London’s FTSE 100 index fell 0.1 per cent. The European insurance sector rose 1.1 per cent.

Allianz SE gained 1.3 per cent after one of its units was considering selling its stake in German online bank N26 at a steep discount, valuing the lender at US$3 billion, two sources familiar with the matter told Reuters.

European equities were faced with turmoil in the banking sector and uncertainty over interest rate hikes, but the Stoxx 600 has recovered in April with gains of more than 2 per cent so far as focus shifted to earnings.

“One thing to watch out for this earning season is we are likely to see improving profit margins,” Hathorn said.

Heineken NV rose 4.0 per cent as it maintained its forecast for 2023 profit growth.

UniCredit and Banco BPM rose about 2 per cent each after an Italian investor in both banks said that a merger would have “strategic value”. The banks sector added 0.8 per cent. REUTERS