Key facts
- European shares were flat as concerns over AI stock valuations prevailed.
- The technology sector declined, with ASML and Infineon down 4% each.
- Siemens Energy fell 5.5% following a downgrade.
- Defence stocks saw a marginal increase, with Saab jumping 5.3% after an upgrade.
- Shell rose 2.2% after slightly raising its second-quarter integrated gas outlook.
European shares traded flat on Tuesday, with investors adopting a cautious stance due to elevated valuations in global AI-related stocks. The pan-European STOXX 600 index was stable at 650.84 points, having closed below record highs in the prior session.
The technology sector experienced the most significant decline, falling 1.6%. Chip equipment maker ASML and semiconductor company Infineon each saw their shares drop by 4%. Siemens Energy lost 5.5% after brokerage Barclays downgraded the company to 'underweight' from 'equal-weight'.
This cautious mood in European tech stocks mirrored a broader glum sentiment in global markets, driven by concerns that a rally in chip stocks over the past quarter had made the sector overvalued. Shares of South Korea's Samsung Electronics slid despite strong forecasts, and Wall Street's Nasdaq futures slipped by nearly 1%.
In contrast, the defence sector saw a marginal increase, with attention focused on a NATO summit where new government defence contracts were anticipated amid U.S. pressure for increased European defence spending. The defence sector has been the top performer on the STOXX index this month. Sweden's defence equipment maker Saab jumped 5.3% following an upgrade from Morgan Stanley to 'overweight'. Among other notable movements, Shell rose 2.2% after the energy giant slightly increased its second-quarter integrated gas outlook.