Tech Sell-Off Extends Across Europe

European equities traded lower on Tuesday, with the STOXX 50 declining 0.9% and the STOXX 600 falling 0.8%, as a broad-based sell-off in technology stocks weighed on sentiment following weakness on Wall Street yesterday. Investor concerns are growing that the technology sector's strong rally may have become overstretched, with increasing questions around AI-related investments and valuations. Tech stocks were among the worst performers, including STMicroelectronics (-4.7%), ASML Holding (-3.5%), and Infineon Technologies (-3.3%). The mining sector was another notable laggard, namely Anglo American (-3.6%), Glencore (-3.4%), and Rio Tinto (-2.9%). In contrast, healthcare stocks outperformed. Sanofi gained 1.5% after the EU approved its Cenrifki treatmen. On the macroeconomic front, preliminary PMI data from Germany came in below expectations, reinforcing concerns about continued weakness in private-sector activity and the broader economic outlook.

European equity markets were set to open lower on Tuesday, after closing at fresh records in the previous session, as attention continued to remain on US–Iran peace negotiations and political developments in the UK. The US Treasury issued a 60-day license authorizing the production, shipment, and sale of Iranian oil, pushing crude prices to a three-month low. Still, Iran’s nuclear program remains a major source of uncertainty, following Vice President JD Vance’s claim that Tehran had agreed to host nuclear inspectors, which Iranian authorities have denied. On the economic front, markets will be closely monitoring the latest PMI data across the region, due out later today. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were 0.9% and 0.7% lower, respectively.

European stocks closed firmly higher at new records on Monday amid support from lower energy prices. The Euro STOXX 50 added 0.4% to 6,320 and the STOXX Europe 600 jumped by 0.7% to 640, both at their record highs. Iran stated that it made progress in the start of talks with the US over a permanent peace deal shortly after both parties signed their memorandum of understanding, supporting the likelihood that energy prices are due to stay lower and soften pro-inflationary risks. Banks led the gains as sovereign yields in the Eurozone pulled back, aiding the outlook for credit activity with Santander, BBVA, and Nordea rising around 2%. Meanwhile, Infineon jumped 5% to track another strong session for companies in the AI infrastructure space as hyperscalers continue to raise cash for capital expenditures. On the other hand, LVMH and Hermes lost 3.6% and 6%, respectively, amid the muted guidance for Moncler and sector downgrades by major brokers recently.