European Markets Fall Amid Global Technology Sell-Off and US Inflation Concerns

European stock markets experienced declines on Thursday, influenced by a global sell-off in technology shares and stronger-than-expected inflation data from the US. The pan-European Stoxx Europe 600 index dropped approximately 0.35%, reversing the modest gains from Wednesday. The German DAX fell by 0.5%, France's CAC 40 decreased by 0.2%, and London's FTSE 100 slipped 0.1%, reflecting widespread weakness across European equities.

The downturn followed a wave of selling on Wall Street that then spread to Asian markets before impacting Europe, particularly affecting technology stocks with renewed worries about borrowing costs and the future of artificial intelligence investments.

Within this context, European semiconductor companies suffered some of the largest losses during Thursday’s trading. This included ASML Holding (EU:ASML), whose shares fell 6.4% despite an earlier announcement of stronger fourth-quarter sales expectations. Other notable declines included ASM, down 9.8%, STMicroelectronics (BIT:STMMI), down 7.1%, and Infineon (TG:IFX), which fell by 8.6%. Although BE Semiconductor Industries (EU:BESI) was also affected, the specifics of its decline were not detailed.

The decline in the semiconductor sector was exacerbated as investors reassessed valuations following the recent US inflation figures. ASML's third-quarter announcement had initially bolstered European technology shares on Wednesday, but the overall economic outlook overshadowed this improvement.

The sell-off was further propelled by US consumer price data revealing that headline inflation rose to 3.7% year-on-year, while core inflation hit 2.6%. These figures led to a reevaluation of interest rate expectations, resulting in higher US government bond yields, which pressured technology stock valuations. The benchmark US 10-year Treasury yield rose to 5.266%, contributing to a perception that equities may be less attractive compared to fixed-income investments, particularly for growth-oriented companies reliant on future earnings projections.