The European technology sector experienced a downturn, while the overall market remained largely unchanged, following reports that ASML Holding NV's order volume significantly missed market forecasts.
Despite a boost from luxury brands like LVMH, which reported positive results, the technology sector, including companies like VAT Group AG and Aixtron SE, faced declines. This setback comes after the technology index in the Stoxx Europe 600 saw a 25% increase over the previous year, with ASML's shares alone surging over 50%.
Luxury brands such as Hermes International, Burberry Group Plc, and Kering saw gains from LVMH's performance. In other earnings news, Adidas AG's share price reached a two-year peak after the company upgraded its profit forecast, while Asos Plc's stock jumped on expectations of higher profits in the coming fiscal year, signaling a successful turnaround for the online retailer.
According to Ipek Ozkardeskaya, a senior analyst at Swissquote, a mix of concerns is currently pressuring the markets. These include the anticipation that the US Federal Reserve will postpone interest rate cuts and the disappointing results from ASML, impacting investor sentiment.
Federal Reserve Chair Jerome Powell recently indicated that the anticipated decline in inflation has stalled, suggesting that it may take longer for the central bank to be confident in achieving its 2% inflation target, which in turn delays any reduction in borrowing costs.
Expectations for rate cuts have been deferred following recent strong US economic data, which has put pressure on European stocks in April after a robust first quarter. The market is now closely watching earnings amid geopolitical tensions, leading to increased volatility for the first time since last year.
Geopolitical tensions, particularly concerning Israel and Iran, have further soured market sentiment, favoring safer investments like the dollar and gold over stocks. However, Daniel Varela, chief investment officer at Piguet Galland & Cie SA, noted that if political tensions ease, stock markets might gradually regain lost ground due to currently low investor sentiment.
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