European shares dragged down by tech’s worst day since October

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European shares ended lower on Tuesday, with the technology sector having their worst day since late-October after a sudden drop in big U.S. tech stocks.

The pan-European STOXX 600 index shed 1.4%, with tech stocks losing 3.8% and some analysts attributing the drop to profit taking.

Tech stocks are trading near record highs on a stellar earnings season and broader optimism over an economic recovery.

“It’s a combination of a sell-off on the winners of the past months… with the month of May and a ‘nervous’ positioning,” said Angelo Meda, portfolio manager at Banor SIM in Milan.

The tech-heavy Nasdaq slipped more than 2%, from near record-high levels, with highly-valued tech companies bearing the brunt of selling.

In Europe, Germany’s bourse shed 2.5%, the most in the region, due to its high composition of tech stocks.

Chipmaker Infineon fell 5.9% and was among the top drags on the German index, after CEO Reinhard Ploss said he was expecting supply constraints in the automotive segment to only ease in the second half, with lost volumes likely to be made up in 2022.

Europe’s automakers fell 3.2%.

Miners rose 0.2%, and oil and gas stocks fell the least, supported by strong resource prices as investors bet on a strong global rebound after massive vaccination drives in developed countries and unprecedented stimulus.

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German meal-kit delivery company HelloFresh fell 6.7% as worries about consumer behavior, amid easing lockdowns, overshadowed a surge in first-quarter customer base.

Software company Teamviewer, another stay-at-home beneficiary, dropped 12.3% despite reporting quarterly orders and core profit ahead of expectations.

More than half of the STOXX 600 companies have reported so far in what has largely been a positive earnings season, with 73% of them topping profit expectations, as per Refinitiv IBES data.

Jewelry maker Pandora jumped 6.0% to the top of the STOXX 600 after reporting quarterly operating profit above estimates, fueled by strong online sales and plans to push for growth in the United States and China.

Norwegian hydrogen firm Nel slumped 15.8% to the bottom of the STOXX 600 after its first quarter results missed expectations. (Reporting by Sruthi Shankar in Bengaluru; Additional reporting by Danilo Masoni; Editing by Anil D’Silva and Alexander Smith)