European shares pulled back on Wednesday, interrupting the momentum that carried the market through a strong end to the second quarter. By 0710 GMT the pan-European STOXX 600 index had fallen 0.3% to 639.64 points, after closing the prior session with its best quarter since October 2020.
The technology sector, which had been a principal contributor to the three-month rally, was largely unchanged on the day. Chip equipment maker ASML was down 1.1%, while IQE and Infineon were trading marginally lower.
Schneider Electric declined 2.1% after the AI equipment maker said it had signed an agreement to acquire Cognite Holding, a privately held provider of AI software and industrial data, for $3.1 billion in an all-cash transaction.
Market participants were also focused on the European Central Bank's Sintra conference, where U.S. Federal Reserve chair Kevin Warsh and ECB President Christine Lagarde were expected to speak later in the day. LSEG-compiled data showed traders are pricing in at least 25 basis points of further tightening from each central bank later this year.
On the commodity front, oil prices have fallen back to pre-Iran war levels. Even so, analysts and investors remain concerned that price pressures could persist for some time, an assessment that is supporting continued vigilance among market participants.
Among the larger movers, Primark owner Associated British Foods slipped 2.7% after warning that it still expects annual profit to be below the prior year’s result and saying the Middle East conflict had impacted its European profit outlook.
Swedish defence equipment maker Saab gained 1.7% after signing a contract to deliver 16 Gripen E fighter aircraft to Ukraine in a deal worth about 24.6 billion Swedish crowns, equivalent to $2.54 billion.
In a development that clouded prospects for a durable settlement, Iran said it would not meet with senior U.S. envoys who had flown to the region after an outbreak of hostilities. That refusal heightened uncertainty around the diplomatic path forward and reinforced market sensitivity to geopolitical developments.
Summary of market context and drivers:
- STOXX 600 slipped 0.3% to 639.64 points by 0710 GMT after a quarter of strong gains.
- Technology sector flat; ASML down 1.1%, IQE and Infineon marginally lower.
- Schneider Electric down 2.1% following $3.1 billion all-cash deal to buy Cognite Holding.
- Trader expectations, per LSEG data, point to at least 25 basis points of additional rate hikes from both the Fed and ECB later this year.
- Oil prices returned to pre-Iran-war levels but concerns remain that price pressures could persist.
- Associated British Foods fell 2.7% after revising profit expectations lower and citing Middle East conflict effects on Europe.
- Saab up 1.7% on a contract to deliver 16 Gripen E fighters to Ukraine worth about 24.6 billion Swedish crowns ($2.54 billion).
- Iran declined to meet with top U.S. envoys after recent hostilities, adding diplomatic uncertainty.
The combination of geopolitical tension, firm expectations for further central bank tightening, and select corporate developments produced a cautious tone across European markets on Wednesday. Investors remained attentive to the day’s central bank speeches and to any further developments in the Middle East that could influence energy markets and regional economic outlooks.