European stock markets moved lower on Thursday as a global sell-off in technology shares and higher-than-expected US inflation data weighed on investor sentiment, increasing concerns about interest rates and equity valuations.
The pan-European Stoxx Europe 600 index declined approximately 0.35%, reversing its modest gains from Wednesday as semiconductor and other growth-oriented stocks came under pressure.
Germany’s DAX fell 0.5%, while France’s CAC 40 declined 0.2%. London’s FTSE 100 slipped 0.1%, reflecting broader weakness across European equities.
The declines followed selling on Wall Street that extended into Asian markets before reaching Europe, with technology companies particularly affected by renewed concerns about borrowing costs and the outlook for artificial intelligence-related investments.
Semiconductor Stocks Lead European Market Declines
European semiconductor companies recorded some of the largest losses during Thursday’s trading, reversing the improvement in sentiment that followed ASML Holding’s third-quarter results a day earlier.
ASML Holding (EU:ASML) shares fell 6.4%, despite the company’s previously announced outlook for stronger fourth-quarter sales.
ASM declined 9.8%, while STMicroelectronics (BIT:STMMI) lost 7.1%. German semiconductor manufacturer Infineon (TG:IFX) fell 8.6%.
BE Semiconductor Industries (EU:BESI) was also among the companies affected by the sector-wide sell-off, although the reported figures did not specify the size of its decline.
The weakness extended beyond semiconductor manufacturers to equipment suppliers and other technology businesses, as investors reassessed valuations following the latest US inflation figures.
ASML’s third-quarter announcement had initially provided some support to European technology shares on Wednesday. However, the improvement proved temporary as broader economic concerns returned to the forefront.
US Inflation Data Raises Concerns About Interest Rates
The market decline followed the release of US consumer price data showing that headline inflation accelerated to 3.7% year-on-year, while core inflation reached 2.6%.
The figures prompted a reassessment of interest rate expectations, contributing to higher US government bond yields and increased pressure on technology stock valuations.
The benchmark US 10-year Treasury yield rose to 5.266%, according to the market figures cited during the session.
Higher government bond yields can make equities less attractive relative to fixed-income investments, particularly for growth-oriented companies whose valuations depend heavily on expectations of future earnings.
The resulting pressure was particularly evident in semiconductor and technology shares, which have attracted substantial investor interest amid increased spending on artificial intelligence infrastructure.
The latest inflation figures also added to uncertainty about the Federal Reserve’s future monetary policy decisions.
European Earnings Season Provides Mixed Signals
Investors were also assessing early third-quarter corporate results for indications of how European companies are performing amid elevated financing costs and uncertain consumer demand.
French luxury goods group LVMH (EU:MC) reported weaker-than-expected third-quarter sales earlier in the week, raising concerns about demand in China and the outlook for discretionary consumer spending.
The results added to uncertainty surrounding the luxury sector, which remains sensitive to changes in consumer confidence and economic conditions in major international markets.
Meanwhile, ASML’s quarterly update provided a more positive near-term outlook for semiconductor equipment demand, supported by its fourth-quarter sales forecast.
However, the company also narrowed its full-year 2026 sales target, highlighting differences in demand trends between AI-related applications and other semiconductor markets.
The contrasting company updates illustrated the uneven performance emerging during the European reporting season.
Bond Yields and Economic Uncertainty Weigh on Equities
Elevated borrowing costs remained a concern for European equity investors as central banks continued to assess persistent inflationary pressures.
European Central Bank President Christine Lagarde has maintained a cautious position on monetary policy and rejected suggestions that the ECB would intervene specifically to support French sovereign debt.
Government bond yields and differences in borrowing costs across eurozone countries have remained important considerations for investors assessing equity valuations.
Higher financing costs can affect corporate profitability, investment decisions and the relative attractiveness of shares compared with bonds.
The latest market movements also reflected uncertainty surrounding energy prices and geopolitical developments, which continue to influence inflation expectations.
European equities therefore remained sensitive to economic data and company earnings announcements, with Thursday’s decline demonstrating the impact of changing interest rate expectations on technology stocks and wider market sentiment.
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