Tech sell-off hits European chipmakers while FTSE 100 bucks trend
A deepening global rout in semiconductor stocks has dragged down Europe’s tech sector, though the UK’s blue-chip index escaped the damage thanks to its low exposure to the industry.
A global sell-off in chip and technology stocks reached European markets this morning, dragging the Stoxx Europe 600 down 0.5%. The tech sector led the decline with a 1% drop, driven by losses among the continent’s major semiconductor manufacturers. Dutch equipment maker ASML fell 4%, while German producer Infineon Technologies dropped by a similar margin and STMicroelectronics declined 4.7%.
The European losses follow a brutal session in Asia and the US, triggered by underwhelming guidance from Taiwan’s TSMC. TSMC shares fell 5.26% after forecasting higher capital expenditure, stoking investor concerns about valuations and returns. The negative sentiment first hit high-profile Asian memory makers before spreading, leaving the Japanese Nikkei 225 down almost 5% and on track for its worst day since March.
For investors, the sudden plunge underscores the fragility of this year’s AI-driven rally. Christopher Forbes of CMC Markets noted that while recent tech earnings were robust, the market reaction shows exactly how much was already baked into share prices. Analysts at Jefferies pointed to a rapid unwinding of what was one of the most crowded trades of the summer, with semiconductor positioning dropping sharply since late June.
The tech weakness is compounded by broader macroeconomic fears, including rising global yields and persistent inflation. Kei Okamura at Neuberger Berman cited shifting views towards hawkish Federal Reserve policy as a trigger for investors pulling back. Brent crude climbed 1.06% to $85.12 a barrel for its first close above $85 in over a month, while Matt Britzman of Hargreaves Lansdown noted that for Netflix, "good is no longer good enough" as its shares tumbled more than 8% after forecasting its slowest quarterly revenue growth in over two years.
The UK’s FTSE 100 bucked the regional trend, rising 0.2% on the back of its relatively low exposure to the technology sector. The index found support in consumer goods, where luxury brand Burberry reported a 5% rise in first-quarter retail sales. Chief executive Joshua Schulman noted that Gen Z shoppers grew by a double-digit percentage, driving the company’s first growth across all product categories in three years.
Beyond equities, the UK economy is wrestling with immediate trade and logistics frictions. The government nationalised British Steel to safeguard 4,000 jobs and domestic supply chains, stripping ownership from Chinese group Jingye. Beijing responded with sharp criticism, with the Ministry of Commerce stating the move dealt "a severe blow to Chinese companies’ confidence in investing in the UK."
Simultaneously, the port of Dover is bracing for severe traffic chaos this weekend. Millions of drivers are expected to take to the roads as the summer holiday season begins. The crossing will face its biggest test yet of new EU border controls.
