(Bloomberg) -- European stocks declined for a third day as rising tensions between the US and China sparked a global pullback across technology shares and the start of the second-quarter earnings season failed to revive investor optimism.
The Stoxx Europe 600 fell 0.5% by the close in Paris. Technology stocks led the drop, with ASML Holding NV slumping as much as 12%, most since 2020 after Bloomberg News reported that the Biden administration is mulling more severe measures to restrict the company’s exports to China. ASM International and BE Semiconductors also dropped around 7%.
European indexes this week have sharply underperformed the US market. The S&P 500 closed at an all-time high on Tuesday, propelled by a rally in cyclical sectors after US retail sales data showed consumers’ resilience and spurred soft-landing hopes.
Barclays strategists led by Emmanuel Cau wrote in a note that while they expected a mixed set of results for this earnings season, the second half of 2024 looked more promising.
“With the rate-cutting cycle getting under way in H2, and burgeoning expectations of a reflationary political scene in the US under a potential Trump administration, we believe investors may look through mixed Q2 earnings, and play the soft landing narrative,” they said. The team cautioned that the trend would likely benefit US stocks more than those in Europe.
So far this year, the S&P 500 is up 18%, compared with the Stoxx 600’s gain of 7.5%.
In other individual stock moves, Daimler Truck Holding AG fellafter the company delivered second-quarter results below expectations, announced an impairment of its China joint venture and put its guidance for the year under review.
Among winners, shares in Lanxess AG surged as much as 22%, their biggest jump ever, after the German chemical group reported better-than-expected second-quarter results.
Adidas AG shares jumped as much as 5.1% in Frankfurt, reaching the highest level since February 2022, after the sportswear maker reported preliminary second-quarter revenue that topped expectations and boosted its sales growth and operating profit forecasts.
--With assistance from Henry Ren.
©2024 Bloomberg L.P.
