European Stocks Fall from Record Highs, Technology Sector a Major Weigh
European stock markets closed sharply lower on Tuesday (June 23rd), after a sell-off in the technology sector prompted investors to reduce positions in riskier assets. The Euro STOXX 50 fell from its record high, while the STOXX Europe 600 also weakened, hitting its lowest level in more than a week. This pressure followed weakness on Wall Street and Asian markets, as stocks that had previously benefited from the artificial intelligence euphoria began to experience a correction.
The technology sector was the main drag on European markets. ASML shares fell sharply, while Infineon, STMicroelectronics, and several other semiconductor companies also fell more than 5%. Investors are beginning to worry about whether large technology companies, or hyperscalers, have overspent on AI infrastructure. If AI investment returns don't immediately meet expectations, the market fears companies will begin to slow spending and reduce demand for the chip supply chain.
These concerns intensified after SpaceX again sought significant funding through the bond market, while South Korea's SK Hynix was reported to be slowing AI chip production to shift capacity to commodity DRAM chips. This situation signals that the AI rally, which has been a major driver of the global market, is beginning to be tested. Industrial stocks with exposure to data center projects, such as Siemens and Schneider Electric, also weakened as investors began to reduce expectations for digital infrastructure spending.
Despite the pressure on the technology sector, some pharmaceutical stocks managed to hold their ground. Sanofi strengthened after the European Union approved its Cenrifki treatment, making the healthcare sector a limited support amid the market downturn. However, support from defensive sectors was not enough to offset the significant pressure from technology and semiconductor stocks, which have a significant presence in major European indices.
On the economic front, PMI data showed that eurozone private sector activity remained in contraction for the third consecutive month. The composite PMI rose to 49.5 from 48.5 in May, but remained below the 50-level that indicates expansion. The services sector remained weak, while manufacturing grew only slightly. This data suggests that the eurozone economy has not fully recovered, leading to market pressures coming from two sides: a decline in technology stocks and still-fragile economic growth.
Source: Newsmaker.id
