European shares slip as tech selloff bites, Zalando slides

STMicroelectronics NV

Yesterday 17:27

STOXX down 0.7%, marks narrow weekly gains
Tech stocks fall, tracking global sector weakness
Zalando slips on BaFin investigation
Volkswagen to cut jobs in next few years, report says
Updates after markets close
By Utkarsh    Hathi, Johann M Cherian and Purvi Agarwal

    June 26 (Reuters) - European shares pulled back from record highs on Friday, with technology shares tracking global sector weakness, while Zalando fell after Germany's financial regulator launched a probe into the retailer's accounts. 
The pan-European STOXX 600 index .STOXX closed 0.7% lower, narrowly marking gains for the week. 
Shares of Zalando ZALG.DE slid 6.3% after BaFin launched an investigation into the online fashion retailer's 2025 financial statements, citing evidence the company breached accounting regulations. The broader retail sector .SXRP lost 1.6%.
Meanwhile, uncertainty around the global technology sector prevailed, with investors focused on a surge in memory chip costs as a result of strong AI-driven demand. Asian equities fell sharply overnight, while Wall Street's tech-heavy Nasdaq flip-flopped between gains and declines.
"The AI narrative in markets right now is all over the place, shifting from questions about ROI from the AI spend, to exuberance about the AI spend," said Richard Reyle, chief investment officer at Questar Capital Partners.
"These conflicting narratives suggest that the market is in the process of picking winners and losers in this space, and that is a process that will take time."
In Europe, the tech sector .SX8P fell 1.2%. 
Chipmakers Infineon IFXGn.DE and STMicroelectronics STMPA.PA slipped 4.5% each. On the other hand, semiconductor equipment makers BE Semiconductor BESI.AS and ASML ASML.AS dropped 2.2% and 1%, respectively. 
AI equipment maker Schneider Electric SCHN.PA shed 1.3%.  Telecom companies Ericsson ERICb.ST and Nokia NOKIA.HE were also down 1.7% and 6.5%, respectively. 
The benchmark STOXX 600 marked modest weekly gains, as easing oil supply concerns following the partial reopening of the Strait of Hormuz helped Brent crude retreat to pre-conflict levels, while Europe's smaller tech exposure helped cushion the losses seen in regional equities.
The STOXX tech index now outperforms the S&P 500 tech sector .SPLRCT on an annual, monthly and quarterly basis, also due to the Wall Street index's bigger exposure to software companies. 
U.S. inflation broke above 4% for the first time in three years in May, reinforcing expectations for a rate hike from the Federal Reserve this year.
Traders are pricing in another 25 basis point interest rate hike by the European Central Bank by year-end, according to LSEG-compiled data. 
Among others, automaker Volkswagen VOWG.DE shares were up 3.9%. A report said the company aims to slash up to 100,000 jobs over the next few years.
London-listed shares of Wise WISEa.L climbed 9.6% after the money transfer company reported strong growth in customers and announced a share buyback plan worth $500 million.

 (Reporting by Utkarsh Hathi, Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Sherry Jacob-Phillips, Joyjeet Das, Ros Russell)
 ((utkarshtushar.hathi@thomsonreuters.com))