European shares drop, extend losses
The pan-European STOXX 600 index closed 0.4% lower at 613.88 points
European shares dropped on Wednesday, extending losses for a third straight session, as a fragile U.S.-Iran truce weighed on sentiment, while investors also assessed a raft of corporate earnings.
Iran seized two ships in the Strait of Hormuz, tightening its grip on the strategic waterway, while the U.S. president continued the U.S. blockade of the Iranian coast.
The pan-European STOXX 600 index closed 0.4% lower at 613.88 points. Major bourses were also lower, with Germany’s DAX declining 0.3% and France’s CAC 40 down 1%. Germany’s economy ministry halved its 2026 growth forecast, while raising its inflation projections.
Geopolitical uncertainty in the Middle East continued to weigh on markets, with euro zone bond yields edging up as oil hit $100, as the U.S. president’s indefinite ceasefire announcement appeared unilateral, with neither Iran nor Israel signalling whether they would honour the agreement.
We know that the rising energy prices are weighing on demand and on economic growth projections. So, unless we do see concrete progress in peace negotiations, I believe that the moves up and down do not necessarily reflect a high conviction direction, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The energy sector climbed 2.3%, continuing to benefit from higher oil prices. Materials and technology inched up 1.7% and 0.6%, respectively.
ASM International shares climbed 7.1% with the computer chip equipment maker forecasting second-quarter revenue guidance above market expectations.
Other chip and technology equipment makers also rallied with German chipmakers and suppliers Aixtron and Infineon adding more than 3% each, while ASML and BESI rose 1% and 1.9%, respectively.
It will be interesting to see if tech can withhold the pressure in earnings season and whether investors start to question once again whether companies are over-investing in AI, said Daniela Hathorn, senior market analyst at Capital.com. For now, it’s still a key driver in markets.