FRANKFURT: Losses in technology shares dragged the European benchmark stock index lower on Thursday as investors assessed the outlook for the sector following a Democratic sweep in the US midterm elections, while weakness in defence names exacerbated the decline.
The pan-European STOXX 600 index was 0.6 percent lower at 653.55 points by 1611 GMT, having pulled back from close to an all-time high earlier in the session.
Technology stocks fell 3.9 percent, to their lowest level in nearly two months, tracking losses on Wall Street where the tech-heavy Nasdaq is poised to confirm a correction.
Among chip stocks, Siltronic slid 14.5 percent, while ASML retreated 7.8 percent and Soitec slumped 17.3 percent.
“It’s really a story of a rotation happening from technology to non-technology and from the US to non-US markets as a result of the midterm elections and the very aggressive Democratic sweep,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Uncertainty prevailed over the outlook for the global technology sector on concerns that increased scrutiny over data centre buildout could slow down spending on developing AI, although analysts highlighted that existing orders are unlikely to be affected.
“Concerns about a potential tightening of artificial intelligence regulations have not disappeared, but they appear to be offset for now by robust investment in data centers and resilient corporate earnings,” said John Plassard, head of investment strategy at Cité Gestion, in a note.
Defence stocks fell 3.1 percent, weighed down by a 16.3 percent drop in Rheinmetall after the company cut its 2026 sales forecast for the second time in three months.
Initially, expectations were high that efforts to end the Iran conflict could be accelerated, while the Democrats could keep a check on excessive fiscal spending and policies targeting sectors such as European banks and clean energy.
However, Brent crude rose more than 2 percent as investors weighed the future course of the US-Israeli war with Iran.