European shares fell on Wednesday as renewed tensions in the Middle East dampened investor sentiment, while technology stocks traded mixed as markets questioned whether the sector's recent artificial intelligence-driven rally could continue.
The pan-European STOXX 600 index was down 0.6% at 642.22 points in early trade, with investors turning cautious after geopolitical developments pushed oil prices higher, according to Reuters.
Energy-sensitive sectors bore the brunt of the selling. The automobile index dropped 1.6%, while banking stocks declined 1.3% as rising crude prices raised concerns over inflationary pressures and their impact on economic growth.
Airline stocks also came under pressure as higher fuel costs weighed on the sector. Shares of Air France and Wizz Air fell more than 2% each, reflecting concerns over the impact of rising oil prices on operating expenses.
Lufthansa shares dropped 4% after Citigroup downgraded the airline's rating to "sell" from "neutral", adding to weakness across the aviation sector.
According to Reuters, investor nerves were rattled after the United States and Iran exchanged strikes, while Washington revoked a licence that had allowed Tehran to sell oil. The developments threatened the fragile ceasefire that had been holding between the two countries and reignited concerns over potential disruptions to global energy supplies.
Technology stocks, which have been among the strongest performers this year on optimism surrounding artificial intelligence, delivered a mixed performance. Investors remained cautious after signs of weakening momentum in global technology markets.
The broader technology outlook was also influenced by weakness in overseas markets. South Korean equities officially entered a bear market after closing 20% below their June record high, while the Nasdaq finished below its 50-day moving average, signalling softer short-term momentum for technology shares.
Within Europe, semiconductor equipment maker ASML gained around 1%, bucking the broader trend. However, chip-related companies Soitec and Aixtron each fell more than 1%, highlighting the mixed sentiment across the sector.
One of the standout gainers was Swedish broadband provider Bahnhof, whose shares surged 18% after telecom operator Telenor agreed to acquire a controlling stake in the company. Reuters reported that the transaction values Bahnhof at approximately 6.1 billion Swedish crowns, or about $629.7 million.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times.)
