European shares flat as strong earnings offset tech sell-off

The pan-European STOXX 600 index inched up 0.1% in early trade

European shares were largely flat on Wednesday, as wave of strong earnings reports across European banking, luxury, and mining heavyweights offset escalating action in the Middle East which drove oil prices 3% higher and a deepening sell-off in international technology stocks.

The pan-European STOXX 600 index inched up 0.1% in early trade.

Germany’s DAX added 0.2%, while France’s CAC 40 was up 0.3%. London’s FTSE 100 was up 0.4% and Spain’s IBEX 35 was flat.

In banking, Standard Chartered lifted its full-year income targets after a boom in wealth management powered an earnings beat, sending its shares up 3%. Swiss company UBS also beat second-quarter net profit expectations, while Spain’s CaixaBank topped quarterly earnings estimates.

Across luxury and consumer sectors, Kering added 9% after flagship brand Gucci reported a smaller-than-expected decline in quarterly sales.

Eyewear company EssilorLuxottica beat first-half profit estimates, up 2.2%, while mining company Rio Tinto posted its highest first-half earnings in four years, adding 2.5%. Healthcare firm GSK raised its full-year margin outlook alongside plans for a $2.5 billion restructuring program.

However, solid corporate balance sheets were unable to fully shield indexes from macro headwinds. Fixed-income markets remained under visible pressure, with higher sovereign bond yields reflecting widespread investor nervousness.

Compounding the geopolitical tension, European tech stocks dropped, tracking a deepening Asian semiconductor rout triggered by SK Hynix’s quarterly operating profit miss.

The disappointing print from the key artificial intelligence memory supplier reignited broader market anxieties over lofty AI valuations, ballooning capital expenditure budgets, and tech companies’ ability to beat higher market expectations by wide margins.

Geopolitical risks and tech jitters were weighing on an unusually dense slate of blockbuster corporate earnings across Europe.