European stock markets slid sharply as a wave of selling in major technology names spread gloom across global equities, leaving investors on edge over the sector’s high valuations and uncertain earnings outlook.
Key indices across the continent closed firmly in the red, with the pan European Stoxx six hundred dropping as technology heavyweights faced renewed pressure amid fears that interest rates could stay elevated for longer than expected.
The Frankfurt based DAX and Paris CAC both shed ground as chipmakers and software firms led declines. Tech stocks were the biggest drags as investors trimmed exposure to companies perceived as vulnerable to higher borrowing costs and changing consumer demand.
Traders said the mood turned cautious after a sudden drop in several American technology giants triggered selling in European counterparts as concerns mounted over stretched price to earnings ratios.
Market analysts warned that valuations in the sector appear increasingly difficult to justify if revenue growth slows in coming quarters.
This shift in sentiment comes as central banks talk tough on inflation and hint at delaying rate cuts that many investors had previously anticipated this year.
Shares in semiconductor equipment providers and cloud computing firms were hit particularly hard, undoing recent gains that had been supported by excitement around artificial intelligence demand and digital transformation trends.
Investors say the market is entering a more volatile phase where profit taking could intensify whenever economic or policy signals spook sentiment.
Brokers reported elevated put option volumes on tech indices suggesting growing appetite for downside protection amid fears of a deeper correction.
Meanwhile defensive sectors such as utilities and consumer staples saw modest inflows as traders rotated towards safer assets. Several fund managers said the selloff could extend if upcoming corporate earnings fail to meet lofty expectations.
While some bargain hunters stepped in late in the session analysts cautioned that vulnerability in the technology sector could set the tone for European markets in the next few weeks.
Written By Ian Maleve
