Key facts
- European shares ended the week lower.
- Uncertainty about Middle East peace efforts impacted investor sentiment.
- Technology stocks paused after a significant rally.
- Stronger-than-expected U.S. jobs data was released.
- Markets are pricing in a European Central Bank interest rate hike next week.
European shares ended the week lower on Friday, with the pan-European STOXX 600 index down 0.3% and losing 0.5% for the week. Uncertainty surrounding Middle East peace efforts, including Hezbollah rejecting a U.S.-brokered Israel-Lebanon ceasefire, kept investors on edge. Brent crude fell for a second consecutive session, remaining near $93 a barrel, as hopes for a U.S.-Iran diplomatic breakthrough appeared limited after earlier exchanges of strikes. The resulting spike in energy costs has complicated the inflation outlook, with data showing euro zone inflation accelerated in May. Markets are now pricing in a 25-basis-point interest rate hike from the European Central Bank next week, a move Deutsche Bank analysts believe is consistent with the data. Sentiment was also dented by stronger-than-expected U.S. jobs data, which showed employers added more positions than forecast in May, reinforcing expectations that the U.S. Federal Reserve could raise interest rates later this year. Technology stocks were among the top sectoral decliners, dropping 2.9% after a rally that had seen them gain about 30% in the past two months. This pullback echoed a broader pause in global technology shares following disappointing results from U.S. chipmaker Broadcom. European chip stocks such as Infineon and Aixtron lost 9.1% and 4.8% respectively, while AI equipment makers Legrand and Schneider Electric slipped 2.3% and 4.5%. The European Commission has proposed new laws to boost domestic cloud, AI, and semiconductor industries. The financial services sector was heading for a 0.8% weekly loss due to rising redemption requests from asset managers. Bodycote slid 13% after Apollo Global Management stated it does not intend to make a buyout offer. Single-board computing company Raspberry Pi jumped 27.6% to a record high after raising its full-year profit forecast.