A global rout in tech stocks dragged Europe's equity benchmark slightly lower on Friday, 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% 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% 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%. Taiwanese equities, a major AI beneficiary in the emerging market universe, dropped 6.47%.
WAR RAGES ON IN MIDDLE EAST
Meanwhile, the U.S. struck bridges and an airport in Iran on Friday, while Tehran responded by hitting a power and desalination plant in Kuwait, one of the Gulf countries that host U.S. airbases.
"There is clearly a real disconnect between what Iran believes it can achieve and what the U.S. 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 July 23. Investors still expect a second rate hike later this year.
Utilities stocks rose 1.55% 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% after the luxury group said the Middle East conflict had weighed on tourist spending in Europe.
Saab rose 9.73% 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% after upbeat quarterly results, while Swedish tech company Lagercrantz slid 7.09% on downbeat quarterly core earnings.
Volvo Group dipped 0.64% even after theSwedish truckmaker reported a 35% jump in second-quarter profit.
Private equity firm EQT gained 11.02%. Australia's Perpetual rejected a sweetened A$2.5 billion ($1.75 billion) takeover proposal from the Swedish company.
