Stock markets: a week of flight from tech. Wall Street closes lower

(Il Sole 24 Ore Radiocor) - Quarterly results, artificial intelligence and geopolitics have dominated the week on the stock markets, both in Europe and beyond. The earnings season began with positive signals from the major US banks, whilst the record results of Taiwan’s TSMC were not enough to prop up chip sector shares, in a market that has become increasingly demanding following the prolonged rally linked to AI. Furthermore, during the week, much of the attention was focused on escalating tensions between the United States and Iran, which could intensify over the weekend, as reported by Axios, with the deployment of dozens of additional tanker aircraft. The weekly performance for Milan was negative: -1.4%. In Europe, Frankfurt fell by 1 per cent, Madrid by 0.9 per cent, whilst Paris ended largely unchanged. London was the exception to the rule over the last five trading sessions (+1%), partly on the back of the ongoing government reshuffle, following the appointment of Andy Burnham as Labour Party leader, which will be followed on Monday by his investiture as Prime Minister.

The sell-off mainly affected European technology, with the sector’s Stoxx 600 index down 3.3 per cent. Travel-related shares were also down (Stoxx 600 Travel -2.9 per cent) amid renewed geopolitical and fuel-related uncertainties. Oil and gas stocks (Stoxx 600 Oil & Gas +3.7%) and food stocks (Stoxx 600 Food +2.1%) moved in the opposite direction. On the Milan Stock Exchange, the week saw Fincantieri (+8.7%) outperform the FTSE MIB, followed by Stellantis (+5.2%) and Eni (+4.3%), buoyed by the surge in crude oil prices. On the flip side, the sharp correction in chip stocks has hit ST (-13.3%, though up 139% since the start of 2026) and Prysmian (-7.2%, though up 45% since the start of the year). There was also selling pressure on Avio (-5.1%), partly in the wake of SpaceX’s weakness over recent sessions. Banks were largely unchanged. MPS fell by 0.9% in the week in which the board of directors examined the two proposals on the table: Intesa rose by 0.4%, whilst Banco BPM lost 1.5%.

The tit-for-tat attacks between the United States and Iran are having an impact on commodity prices: Brent crude rose by 15.2% to $87.5 per barrel over the week, whilst WTI rose by 13.8% to $82.1. European natural gas prices also surged, with the TTF rising by 20 per cent to €58.6 per megawatt-hour in Amsterdam. Spot gold, by contrast, fell by 2.6% to $4,017 an ounce. On the currency market, the euro gained 0.2% against the dollar to close at $1.1436, whilst it rose by 0.7% against the yen to 185.78.

Tech is once again influencing market sentiment on European stock markets once again during the final trading session of the week, as the sell-off in chip shares continued, helping to push down Nvidia Corp from the top spot among companies by market capitalisation, which was reclaimed by Apple . The turmoil began in Asia (Nikkei -4 per cent), before spreading to Europe and returning to Wall Street, which is now continuing to trade lower. Milan closed down 0.94%, weighed down by the double plunge in St (-4%) and Prysmian (-4.53%). The rest of Europe was also in the red, whilst London held up (+0.27%) on the appointment of Andy Burnham as Prime Minister. The slowdown in Eurozone inflation – which fell to 2.8% in June from 3.2% in May – did little to help, whilst escalating tensions between the United States and Iran are continuing to drive up oil prices. Investors are questioning the overall sustainability of the valuations reached by AI-related stocks, and the scale of the investments. “The situation is evolving from a simple sell-off in tech shares into something much broader. This is evident in indices such as the Nasdaq, which has made huge strides very quickly”, but “over too short a period”, according to Chris Beauchamp of IG.

Wall Street is trading lower, due to a sell-off in semiconductor shares, which is weighing on the week’s performance. In a note issued this morning, strategists at BBH stated that investors are ‘increasingly questioning the sustainability of the current boom in artificial intelligence investment’. ‘Although volatility in the technology sector may persist in the short term, we believe that the repositioning of investments will ultimately prove positive,’ writes Barclays, ‘creating more attractive entry points for long-term investors focusing on the structural theme of artificial intelligence’. In addition to chip stocks,  shares in Netflix shares are falling sharply , after the company reported second-quarter results broadly in line with expectations but disappointing earnings forecasts. Apple has overtaken Nvidia Corp , becoming the company with the highest market capitalisation at $4,880 billion. SpaceX continues to fall below its IPO price.