European Stocks Retreated Due to Tech-Led Declines on Wall Street
European stocks recently experienced a setback, mirroring the tech-led declines on Wall Street, and were further pulled down by a significant slump in the shares of Airbus SE. The Stoxx 600 Index witnessed a 0.3% decline, with technology companies and industrials exerting pressure on the benchmark gauge. The Eurozone’s largest aerospace company, Airbus, saw its shares plummet by almost 10% after revising its guidance downwards due to ongoing supply-chain issues. Even suppliers to the planemaker experienced a drop in their stock prices. Meanwhile, contracts on US stocks remained relatively stable, with Nvidia Corp. enduring a three-day drop on Monday, although several non-tech sectors in the US saw advances.
As the quarter comes to a close, investors are seizing opportunities in value stocks and shifting away from the technology sector towards other areas of the market. In Europe, the spotlight is on the main political parties in France as they engage in a debate ahead of the first round of legislative elections scheduled for Sunday.
According to Hideyuki Ishiguro, the Chief Strategist at Nomura Asset Management Co., "As we approach the quarter-end, global investors are rebalancing their portfolio, selling assets that have performed well recently and buying names that have lagged."
Simultaneously, the dollar remained steady, and US Treasuries experienced minor fluctuations. The drop in technology shares is not attributed to a macroeconomic factor but rather to an investor sentiment shift related to the reversal of the significant AI-related outperformance observed so far this year, according to analysts at Danske Bank. They added that it is difficult to gauge if this trend will persist, as the fundamentals have largely remained unchanged over the past week.
On a different note, the US government is reportedly investigating China Mobile, China Telecom, and China Unicom over concerns that these firms might exploit access to American data through their US cloud and internet operations by sharing it with Beijing, as per information from Reuters.
In the commodities market, oil prices maintained their gains as investors carefully assessed the potential repercussions of escalating geopolitical tensions. Gold prices saw a slight decline, while Bitcoin rebounded after a decline on the previous day.
Key events to watch out for this week include US Conference Board consumer confidence data, Fed speeches, US new home sales figures, China’s industrial profits report, Eurozone economic and consumer confidence numbers, US durable goods orders, initial jobless claims, and GDP data, Nike’s earnings release, Japan’s Tokyo CPI, unemployment and industrial production reports, US PCE inflation, spending and income figures, University of Michigan consumer sentiment data, and a speech from Fed’s Thomas Barkin.
As for the market movements:
Stocks:
- The Stoxx Europe 600 fell by 0.3%.
- S&P 500 futures showed minimal changes.
- Nasdaq 100 futures remained steady.
- Dow Jones Industrial Average futures rose by 0.1%.
- The MSCI Asia Pacific Index saw a 0.9% increase.
- The MSCI Emerging Markets Index experienced slight fluctuations.
Currencies:
- The Bloomberg Dollar Spot Index saw minor changes.
- The euro remained stable at $1.0725.
- The Japanese yen appreciated by 0.1% against the dollar.
- The offshore yuan maintained its position against the dollar.
- The British pound did not see any significant movements against the dollar.
Cryptocurrencies:
- Bitcoin increased by 2.3% to $60,831.98.
- Ether rose by 1.6% to $3,363.57.
Bonds:
- The yield on 10-year Treasuries remained stable at 4.24%.
- Germany’s 10-year yield dropped by two basis points to 2.40%.
- Britain’s 10-year yield decreased by one basis point to 4.07%.
Commodities:
- Brent crude oil prices showed minimal changes.
- Spot gold prices fell by 0.4% to $2,326.32 per ounce.
This information was compiled with the assistance of Bloomberg Automation and contributions from Toshiro Hasegawa, Aya Wagatsuma, and Sujata Rao.
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