Key facts
- European shares were largely unchanged as geopolitical concerns counterbalanced positive corporate earnings.
- ASML's stock rose 3.8% after it increased its 2026 financial forecasts.
- Richemont shares jumped 6.1% following better-than-expected first-quarter results.
- Oil prices climbed to $85 a barrel due to intensifying Iran-U.S. tensions and the Strait of Hormuz closure.
- Germany's DAX index underperformed due to declines in software companies like SAP and Nagarro.
European shares remained largely flat on Wednesday, with escalating tensions in the Middle East tempering the positive impact of strong earnings reports from key companies like ASML and Richemont.
The pan-European STOXX 600 index showed minimal change by 0824 GMT, as investors adopted a cautious stance amid rising oil prices, which climbed to $85 a barrel due to intensifying Iran-U.S. tensions and Tehran's closure of the Strait of Hormuz.
Technology stocks, however, saw a notable increase of 1%, propelled by ASML's 3.8% gain. The chip equipment maker boosted investor confidence by raising its financial forecasts for 2026, reaffirming expectations for sustained AI-driven demand. Other chip-related stocks, including ASM and Soitec, also experienced gains of over 1%.
Luxury stocks, which have been the poorest performing sector this year, added 2.9%. Richemont, the owner of Cartier, surged 6.1% after reporting first-quarter results that surpassed expectations, largely due to robust demand for its jewelry in Asia and the Americas.
Michael Metcalfe, head of macro strategy at State Street, commented that despite positive earnings news for some European stocks, the broader geopolitical risk might encourage a more defensive investment approach.
The conflict in the Middle East also introduced uncertainty regarding the European Central Bank's future monetary policy decisions. Policymaker Martin Kocher indicated he currently sees no second-round inflation effects from the conflict, even as traders maintain expectations for at least a 25 basis point rate hike by the ECB as early as September.
Germany's benchmark index lagged its regional peers, declining by nearly 0.7%. This underperformance was attributed to a 1.2% drop in software company SAP, with other software firms like Dassault Systemes and Sage also losing around 1%.
In other notable movements, Deutsche Bank shares slipped 0.6% following news that Frankfurt prosecutors executed a search warrant at one of its branches. Software developer Nagarro lost 2.7% after Germany's financial watchdog, BaFin, initiated an enforcement review of the firm's 2022 consolidated financial statements. Additionally, Axfood fell 11.2% after its quarterly results fell short of estimates.