European equity markets opened lower on Thursday as technology and food and beverage names led declines while energy stocks advanced amid renewed Middle East tensions.
The pan-European STOXX 600 index fell 0.5% to 643.56 points by 0917 GMT. The technology sector was down about 0.8%, with semiconductor names taking the brunt of the weakness.
Chipmakers in focus
STMicroelectronics was the most notable laggard in the tech cohort, plunging 13% after the chipmaker issued a third-quarter revenue forecast with a midpoint slightly below market expectations. BE Semiconductor also moved lower, dropping about 2% following the release of its second-quarter results.
Offsetting some of the semiconductor pain was a near-24% jump in Soitec after the company reported first-quarter revenue that exceeded expectations.
Investor sentiment toward technology remains mixed, with market participants reacting to rising spending by U.S. hyperscalers on artificial intelligence while semiconductor beneficiaries of that spending struggle under high valuations. "You’re seeing more questions being asked about where’s the future revenue going to come from... twelve months ago the rage was about hyperscalers and the same questions were asked. Now, the semis came into the fall," said Rushabh Amin, multi-asset portfolio manager at Allspring Global Investments. "Even if you have decent earnings, there is a kind of drag coming from a slight unwind in sentiment and in positioning."
Food and beverages slump
The STOXX 600 food and beverages index led sector losses, driven by a steep decline in Nestle. The Swiss food giant tumbled nearly 7% after reporting results, putting it on course for its largest one-day drop since July 2002 despite the company raising its full-year organic sales outlook. The company also said it expects to raise about $3.43 billion from selling part of its water and premium beverages business.
Energy gains on geopolitical flare-up
Energy stocks rose 1.6% as Brent crude climbed above $96 a barrel following a fresh round of U.S. strikes on Iran and attacks by Yemen's Houthis on oil tankers in the Red Sea, developments that have expanded a conflict rattling global markets. TotalEnergies gained about 2.7% after reporting its strongest quarterly earnings in nearly three years, supported by higher oil prices and robust refining margins.
Other notable moves
- Takeover target easyJet climbed roughly 5% despite the budget carrier reporting a 70% drop in third-quarter profit.
- Finnish forestry group Stora Enso said its quarterly operating profit was below market expectations, sending its shares down around 11%.
Monetary policy backdrop
Market participants were also focused on the European Central Bank, which is widely expected to keep interest rates unchanged later in the day. Investors will be looking for any guidance on future moves - markets are pricing in one 25-basis-point rate hike and see nearly a 90% chance of another.
The day's price action reflected a mix of company-specific earnings reactions, valuation reassessments in technology and semiconductors, geopolitical drivers lifting energy prices, and an upcoming central bank decision that could affect broader market positioning.