European stock markets contain the tech rout that started in Asia

This morning’s edition had reported the sharp decline at the opening of Asian stock markets, triggered by U.S. inflation data that came in higher than expected. In the afternoon came the response from European markets, allowing that picture to be updated with figures from the continental session.

The Nikkei closed down 4.9%, South Korea’s Kospi down 7.57%, according to data processed and reported by FIRSTonline. In Milan, Technoprobe loses over 10%, Stm follows with a 7% decline, Prysmian posts a 5.6% drop. Frankfurt falls 0.4%, while Paris rises 0.2%, signaling a divergence among European markets that does not simply mirror the Asian plunge: not all markets on the continent are reacting the same way to the sell-off triggered overseas.

On the commodities front, Brent falls to $104 a barrel, down 1.9%, as hostilities intensify in the Middle East on the Houthi front and in the Strait of Hormuz linked to Iran. The decline in crude, against a backdrop of rising geopolitical tensions, signals that energy markets are currently weighed down more by fears over global demand than by the risk of a supply disruption.

On the Italian bond market, the spread between Btp and Bund falls to 107 basis points, with the yield on the Italian ten-year note at 4.4%. The decline in the spread, on a day when stock markets remain under pressure from selling in tech stocks, signals that investor nervousness has concentrated above all on the sector linked to artificial intelligence, without affecting Italian sovereign debt to the same degree.

The sell-off in Technoprobe and Stm, both exposed to the semiconductor supply chain, shows how the contagion that started in Tokyo and Seoul this morning spread in the afternoon to Italian stocks most closely tied to components for artificial intelligence, while less exposed sectors, such as French energy, held up better in the same session. The picture emerging at the end of the day is one of a sectoral correction concentrated in tech, rather than a broad-based decline across European markets.