European Shares Fall as High Oil Prices and Technology Sector Weigh on Markets

Persistent high oil prices and a very weak technology sector drove investors away from European stock exchanges on Thursday. Andreas Lipkow, market analyst at the broker CMC Markets, noted that the market environment is becoming uncomfortable, pointing out that lingering inflationary pressure remains the central concern. The EuroStoxx 50 lost 1.94 percent at the stock market close to finish at 6,087.01 points, leaving the downward trend in place since mid-August intact. The eurozone's benchmark index failed to break above the 21-day moving line for the short-term trend and ended the trading session just below the more closely watched 200-day moving line, which serves as an indicator for longer-term developments. Lipkow added that rising energy costs are increasingly putting both consumers and central banks in a difficult position, making developments in the Middle East decisive. Without a prompt de-escalation and a noticeable easing of oil prices, the risk increases that investors will reduce their equity holdings regardless of short-term corporate results, especially as a growing number of corporations adopt a more cautious stance in their business outlooks. Performance was somewhat less negative outside the eurozone. The British FTSE 100 dipped by 0.26 percent to 10,725.03 points. The Swiss blue-chip index SMI closed down by 0.03 percent at 14,547.97 points, supported in Zurich by gains among heavyweights Novartis and Nestlé. Growth at food producer Nestlé gathered pace in the third quarter, and its shares gained 1.1 percent. European technology values could not escape the selling pressure originating from the Nasdaq exchange in New York, where chip and artificial intelligence stocks suffered significant losses following quarterly financial figures from Lam Research and Meta. Within the EuroStoxx, Siemens Energy shares were hit particularly hard, plunging 8.6 percent. Schneider Electric, Infineon, and ASML also suffered severe declines. In contrast to the weak trend across the technology sector, SAP provided a positive highlight following its quarterly numbers. Shares of Europe's largest software provider gained 3.2 percent to lead the EuroStoxx, keeping broader losses in the tech sector in check. Meanwhile, shares of Hermès fell by 4.9 percent as the luxury goods maker continued to be weighed down by weak business in China. Asia represents the most important market for Hermès and served as a guarantor for strong growth in past years, making the weak performance there a disappointment for investors. Nokia shares were driven by data centers. Following a surprisingly strong summer business performance, the network equipment maker prepared for even higher costs regarding its restructuring program. Analysts at Oddo praised the financial results but noted the absence of an upgraded forecast, and the shares plummeted by nearly 10 percent.