Susanna Riva European stock markets had a difficult day, with markets closing in negative territory. Technology was the hardest hit, while oil continued its rise, negatively impacting markets.
Amidst volatile conditions, investors remained cautious, with mixed performances across sectors contributing to an overall picture of uncertainty.
Technology in trouble: the factors behind the decline
The technology sector saw a significant decline, with chip stocks in particular under pressure. Factors contributing to this negative performance included the prospect of an interest rate hike to combat inflation and the fluctuating enthusiasm following the rally in the first half of the year.
Among major stocks, ST lost 3,41% in Milan, Infineon 3,85% in Frankfurt, while BE Semiconductor and ASM International fell 3,6% and 2,44%, respectively, in Amsterdam. The mega-IPO of Shenzhen Longsys Electronics in Hong Kong helped keep the European tech sector under pressure.
Oil Rises: The Implications for Markets
Oil continued its rise, with WTI rising 2,9% to $102,92 a barrel and Brent crude up 2,7% to $107,47. Tensions in the Middle East and potential threats to energy infrastructure fueled the price surge.
The three-month contract on the London Metal Exchange (LME) hit $14.617 a ton, updating the previous day's high. Structural factors, such as growing demand for power grids, energy transition, and data centers, coupled with increasingly tight physical availability outside the United States, are supporting prices.
Contrasting performances: the sectors in evidence
While technology declined, other sectors performed well. Energy rose 1%, buoyed by rising oil prices. Pharmaceuticals also rose 2%, demonstrating a defensive nature during periods of volatility.
Among the highlighted stocks, Antofagasta, one of the world's largest copper producers, rose 4,7% in London, buoyed by the commodity's new record high. Conversely, Novartis plunged 10,89% on the Zurich Stock Exchange after the failure of a Phase III trial of an experimental drug for type 1 myotonic dystrophy.
Bond and currency markets: recent developments
The day was also marked by movements in the bond market, with European government bond yields rising. The BTP-Bund spread widened to 88 basis points, with the Italian 10-year yield at 4,40% and the German one at 3,52%. On the currency front, the euro weakened against the dollar, falling to 1,1543.
Bucking the energy trend, gold had a negative session, falling 1,2% and falling to $4.285 an ounce. This movement indicates investors' adjustments to various asset classes, including stocks, bonds, and commodities.