European shares fall as market jitters stem from technical selloff

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European shares declined on Friday as a technical selloff on Wall Street fueled market jitters while investors prepared for major central banks to announce their latest policy decisions next week.

Germany’s tech-heavy DAX index was the biggest loser in Europe, down 0.6 percent.

The sector-wide Stoxx 600 declined 0.1 percent as energy sector gains failed to offset continued slump in technology shares, while both France’s CAC 40 and London’s FTSE 100 were flat at the market open.

Technology stocks declined, with the Stoxx 600 technology index down 1.6 percent after disappointing earnings results from industry giants Tesla and Netflix triggered a sharp selloff on Wall Street.

Wall Street’s tech-focused Nasdaq Composite, which has gained 34 percent since the start of the year riding the wave of artificial intelligence, fell more than 2 percent on Thursday, while the Fang+ index of large tech companies gave The day recorded its worst day. Year.

Futures contracts tracking the Nasdaq 100 pointed to the index opening 0.3 percent higher on Friday, while contracts tracking the benchmark S&P 500 advanced 0.2 percent ahead of the New York open.

Meanwhile, investors prepare for the US Federal Reserve to hold its policy meeting next week, with most expecting policymakers to raise the benchmark federal funds rate by 0.25 percentage points to a target range between 5.25 percent and 5.5 percent.

Lower-than-expected inflation data last week suggested that the central bank’s historic tightening cycle may soon be coming to an end.

“While inflation dynamics are looking more encouraging, the general sentiment is that central banks are nearing their cycle peak in terms of tightening,” said Patrick Garvey, regional head of Americas research at ING.

But as traders debated the prospect of rate hikes ahead of next week’s meeting, fresh data showed the number of people applying for US unemployment aid fell contrary to expectations, a sign the labor market remains resilient to rising borrowing costs.

Equities in Asia were mixed, with Hong Kong’s Hang Seng rising 0.6 percent while China’s benchmark CSI shed 0.1 percent as investors digested Beijing’s new measures to support the automotive and electronics sectors.

Mohit Kumar, chief Europe financial economist at Jefferies, said: “The measures issued so far have been weaker than expected. We could see more stimulus measures in the coming weeks, which should provide short-term support to the market.”

Amid fears that China’s post-pandemic recovery was losing momentum, investors had been hoping Beijing would extend another stimulus package at next week’s Politburo meeting.