European stock markets declined, with the sell-off in technology shares intensifying, and inflation threats also weighing on market sentiment.
The Stoxx Europe 600 index closed the week down 0.5%, marking its worst performance in three weeks. A robust U.S. jobs report bolstered expectations that the Federal Reserve is poised to raise interest rates, putting pressure on tech stocks and other sectors sensitive to borrowing costs.
Infineon Technologies recorded its largest drop since August 2023. As analysts turned more cautious on the semiconductor stock, it became one of the biggest drags on the index.
European equities have gained just slightly more than 5% year-to-date, as concerns that energy prices could reignite inflation have capped gains. Against this backdrop, the European Central Bank is anticipated to implement its first interest rate hike since September 2023 next week.
Roberto Scholtes, Chief Strategy Officer at Singular Bank, stated, "The ECB is generally in a neutral stance, only adjusting rates in response to the recent rise in inflation."
U.S. non-farm payrolls for May increased more than all forecasts, with the unemployment rate holding steady. May saw an addition of 172,000 jobs, with data from the previous two months revised upward.
Swap contracts indicate traders are pricing in a 25-basis-point rate hike by the Federal Reserve by its December policy meeting.
In individual stock movements, Bodycote's share price fell by its most significant margin since March 2020, after Apollo Management Holdings indicated it did not intend to make a formal takeover offer. A bearish report from Cleveland Research drove shares of Adyen NV lower.
Comments