European Markets Fall as Technology Shares and Rising Oil Prices Weigh on Milan and Paris
European stock markets opened sharply lower, with Milan’s FTSE Mib index dropping 1.08% to 49,109 points, dragged down by falling technology shares and Brent crude climbing above 112 dollars per barrel. Paris fell 0.82% with the CAC 40 at 7,857 points, Frankfurt dropped 0.57% to reach 25,497 points, and London lost 0.49% to hit 10,700 points, according to reporting by Evening Courier.
The downturn extended across multiple sectors, with SoldiOnline.it reporting that Piazza Affari accentua le vendite e arriva a cedere il 2% as risk aversion gripped continental exchanges. Bond markets showed parallel stress, pushing the Italian Btp-Bund yield spread to 125 basis points while the French benchmark OAT yield climbed to 5.11%.
Technology Sector Retreats on Artificial Intelligence Spending Doubts
Technology stocks led the decline across European trading floors amid growing skepticism regarding the timeline for returns on artificial intelligence investments. Semiconductors faced heavy selling pressure, with Technoprobe shedding 3.7% and STMicroelectronics falling 3.4% in Milan, alongside losses for ASML (-3%) and Infineon (-2.8%), as tracked by Borsa Italiana.
Electrical infrastructure suppliers tied to data center expansion also dropped, including Prysmian falling 4.1%, Legrand losing 3.5%, Schneider Electric dropping 3.2%, and Siemens declining 2.6%. Santiago Mateo, head of equities at CaixaBank Asset Management, noted that markets remain willing to reward heavy artificial intelligence spending but are becoming much more demanding regarding measurable returns, monetization, and earnings growth.
Asian markets experienced severe losses overnight ahead of the European session. Tokyo’s Nikkei 225 index dropped 2.65%, driven by steep declines in SoftBank Group (-5,6%), Tokyo Electron (-5,9%), and Advantest (-5%), as reported by Il Sole 24 ORE. South Korea’s Kospi index fell 3.75%, led down by memory chip makers Samsung (-3.9%) and SK Hynix (-4.7%), while Hong Kong’s Hang Seng index lost 3.17%.
Energy Markets Surge on Middle East Tensions and Supply Pressures
Crude oil prices advanced significantly, with West Texas Intermediate pushing toward 100 dollars per barrel and Brent trading above 112 dollars. Media reports indicated that market anxiety was fueled by the United States military preparing for a potential offensive on Iran, despite statements from President Donald Trump indicating Washington will not strike Tehran before the upcoming midterm elections.
Simultaneously, European natural gas prices remained elevated, with Amsterdam’s TTF contract rising above 89 euros per megawatt-hour, hovering near highs not seen since 2022, even as Moscow signaled openness to tripartite talks with China and Russia regarding the war in Ukraine.
Corporate Performance Diverges Across Piazza Affari
Individual stock movements in Milan reflected sharp sector divergence. Stellantis shares dropped 2.12% following September European vehicle registration data showing a 4.5% increase compared to a 10% expansion for the broader market. Financial institutions also traded lower, with Banco Bpm down 2%, Intesa Sanpaolo losing 2.22%, and UniCredit falling 1.61%.
Bucking the broader downward trend, Moncler gained 0.82% following positive financial results and solid performance in Asian markets. Telecom Italia rose 0.54%, while energy firms showed mixed results, with Eni gaining 0.72% and Enel dropping 0.80%.
Frequently Asked Questions About Market Pressures and Commodity Spikes
Why are European technology stocks falling alongside Asian markets?
European and Asian technology shares are declining due to growing investor anxiety over whether capital expenditures in artificial intelligence data centers will yield sustainable medium- and long-term financial returns. These concerns were reinforced by lower capital spending guidance from major American technology firms such as Tesla.
How are European sovereign bond yields reacting to the market selloff?
European sovereign bonds are experiencing downward pricing pressure, which pushes their yields higher. The spread between Italian Btp and German Bund bonds stands at 125 basis points, while French OAT yields have climbed to 5.11%.