European shares were little changed on Friday but remained on track for their first weekly decline in five weeks as weakness in technology stocks and renewed tensions between the United States and Iran dampened investor sentiment.
The pan-European STOXX 600 index edged 0.1% lower to 640.28 points by 0849 GMT, with losses in technology companies offsetting gains in most other sectors.
The benchmark index is poised to end a four-week winning streak after investors reassessed lofty valuations in artificial intelligence-related stocks while monitoring escalating geopolitical risks in the Middle East.
Technology stocks remain under pressure
The technology sector fell 1.3% on Friday as investors continued taking profits following months of strong gains driven by enthusiasm for artificial intelligence.
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The sector also remained focused on the closely watched U.S. stock market debut of South Korean memory chip maker SK Hynix after its $26.5 billion share sale.
Among European chip-related stocks:
- Soitec fell 3.3%.
- BE Semiconductor Industries declined 1.6%.
- ASML dropped 2.3%.
“The large swings we’re seeing in technology stocks suggest investors remain under stress amid elevated valuations,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.
“Attention is now turning to SK Hynix’s U.S. debut, which could help gauge broader appetite for AI-related stocks and influence sentiment across the sector.”
Iran tensions weigh on market sentiment
Investor caution also reflected renewed uncertainty in the Middle East after Iranian forces targeted U.S. military infrastructure in Gulf states following fresh U.S. strikes on Iran.
The latest escalation further weakened the fragile three-week-old ceasefire and renewed concerns over potential disruptions to shipping through the Strait of Hormuz, one of the world’s most important energy trade routes.
Higher oil prices and possible supply disruptions have raised concerns about inflation, particularly in energy-importing Europe, where markets are closely watching the implications for economic growth and European Central Bank policy.
Telecoms and travel outperform
Despite weakness in technology, most sectors in the STOXX 600 traded higher.
Telecommunications stocks led gains, rising 1.4%, after Vodafone surged nearly 11%.
The rally followed an announcement by UAE telecoms group e& that it would sell its stake in Vodafone to the family investment group of French billionaire Xavier Niel.
Travel and leisure stocks gained 0.8%, supported by strength in airline shares.
British budget carrier EasyJet jumped 14% after agreeing in principle to a £5.7 billion ($7.65 billion) takeover approach from Apollo Global.
Steel stocks rally on broker upgrades
European steelmakers outperformed after J.P. Morgan adopted a more positive view of the sector.
The investment bank upgraded ArcelorMittal to “neutral” from “underweight,” lifting its shares 5%.
Austria’s Voestalpine climbed 6%, while Germany’s Salzgitter surged 10.3% after both companies received double upgrades to “overweight.”
Other movers
Wealth manager St. James’s Place was among the session’s biggest losers, falling 8.5% after reports that Sovereign Wealth, one of its largest partner firms, was in talks to join a Swedish wealth management group.
Future outlook
Markets are expected to remain focused on two key drivers in the coming days: whether the renewed U.S.-Iran hostilities escalate further and whether SK Hynix’s U.S. debut reinforces or weakens investor confidence in the AI-driven technology rally.
With geopolitical risks pushing oil prices higher and technology valuations facing increased scrutiny, analysts expect volatility across European equities to remain elevated in the near term.
With information from Reuters.
