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Tech stocks sour, sending European shares to two-month low
[LONDON] Slumping technology stocks after a global cyber attack and depressed crude oil prices cast a cloud over European shares on Wednesday, sending them to their lowest in two months.
The pan-European Stoxx 600 hit its lowest since April 24 in early deals, down 1 per cent, in step with euro zone stocks and blue-chips.
Technology stocks fell 1.6 per cent to a two-week low, the worst performer with every stock on the index in the red.
The losses came after a ransomware attack swept the globe, disrupting computers at banks and large companies including WPP , Moeller Maersk and Metro.
Shares in affected companies were not hugely or uniformly dented, with WPP down 0.4 per cent, Maersk up 0.2 per cent and Metro up 0.5 per cent.
Anti-virus provider Sophos fell 4.9 per cent, a top UK mid-cap faller, and security firm NCC Group slid 2.1 per cent. Both had been among the best performers when a global 'WannaCry' ransomware attack hit computers in mid-May.
In Helsinki, digital security firm F-Secure, which had also made gains in the previous cyber-attack, was down 1 per cent. But investors said tech stocks were falling in the wake of US peers.
"Tech generally is weak following the lead of US tech which sold off aggressively last night," said Neil Campling, head of global telecoms, media and technology research at Northern Trust, adding that a downgrade to 'hold' was also weighing on Sophos. "After high profile attacks you have a massive spike in corporate activity - shutting the door after the horse has bolted," he added.
"We see the downgrade today on Sophos as giving an opportunity to buy." Semiconductor makers AMS, Dialog Semiconductor, ASM International and STMicro were among the worst performers on Wednesday, falling 2 to 4.1 per cent.
Interest-rate sensitive utilities and real estate stocks tumbled, weighed by hawkish comments from European Central Bank President Mario Draghi and a slew of Federal Reserve policymakers including Fed Chief Janet Yellen.
Germany's utilities RWE and E.ON were the worst-performing on the DAX, down 2 to 2.2 per cent.
Adding insult to injury, lower oil prices weighed on oil and gas stocks, with Tullow Oil the biggest faller after its first-half results.
Meanwhile, positive results and acquisitions drove the handful of gainers.
Business supplies distributor Bunzl bounced 4 per cent after saying a boost in recent acquisitions would help it increase first-half revenue 7 per cent. "We anticipated an acceleration in underlying growth to 7 per cent in the second half but organic growth is tracking ahead of our forecasts already at Q2," said UBS analysts. "New M&A announced today should have a positive impact of around 0.5 per cent to the top-line when fully annualised," they added.
French industrial group Legrand also rose 2.8 per cent after saying it would buy US infrastructure company Milestone.