Europe in the red with tech and political risk

Europe’s main stock markets are consolidating on Tuesday morning, as investors rebalance their portfolios in the run-up to the end of the quarter, and as caution continues to prevail on the political fronts in France, Great Britain and the United States.

In Paris, the CAC 40 lost 0.63% to 7,658.35 points around 07:20 GMT. In London, the oil-rich FTSE 100 held up well, gaining 0.11%. In Frankfurt, the Dax

lost 0.87%.

The EuroStoxx 50 index fell by 0.67%, the FTSEurofirst 300 by 0.35% and the Stoxx 600 by 0.34%.

Wall Street futures forecast a rise of 0.14% for the Dow Jones, 0.04% for the Standard & Poor’s 500 and 0.09% for the Nasdaq, following a mixed session marked in particular by Nvidia’s fall (-6.7%) for the third time in a row. The stock lost over 16% from its recent peak.

The rebalancing of investor portfolios is shifting away from technology stocks, particularly in the artificial intelligence (AI) sector, towards “value” stocks, i.e. those with a low price relative to their intrinsic value.

In Europe, the technology sector on the Stoxx 600 lost 1.61% on Tuesday, in the wake of the downturn in the AI sector on Wall Street and on the Nasdaq. ASML lost 2.52%, ASMI 1.91%, STMicroelectronics 2.67% and BE Semiconductor 2.67%.

Equities were also affected by political risk, with the ten-year yield spread between Germany and France rising to 72.35 basis points, ahead of a debate at 19:00 GMT between Jordan Bardella, Gabriel Attal and Manuel Bompard, the three coalition leaders for the June 30 and July 7 parliamentary elections.

The two scenarios based on the Rassemblement National (RN) coming to power or the country becoming ungovernable for lack of a majority in the National Assembly are creating “a lot of uncertainty” on the financial markets, both in terms of the economy and social cohesion, said Stéphane Boujnah, CEO of stock exchange operator Euronext, on Tuesday.

In Great Britain, a televised debate between outgoing Prime Minister Rishi Sunak and Keir Starmer, leader of the Labour opposition, is scheduled for Wednesday ahead of the legislative elections, while in the United States the debate between outgoing President Joe Biden and his predecessor Donald Trump is expected on Friday (Thursday evening, local time).

In corporate news, Airbus , which warned about its targets and announced its intention to book a 900 million euro charge in its first-half accounts, dropped 8.52%.

Eurofins , whose shares plunged 16.15% on Monday following allegations of financial malpractice by hedge fund Muddy Waters, rebounded by 4.68% following a denial by the French scientific laboratory group.

Novo Nordisk is in the green (+0.18%) thanks to the approval in China of its weight-loss drug Semaglutide. (Written by Claude Chendjou, edited by Blandine Hénault)