Trade-sensitive technology stocks led losses in European markets on Friday after US chipmaker Broadcom Inc’s sales warning and disappointing industrial data out of China came as the clearest signs yet of the damage a trade dispute might do to global growth.
The pan-European STOXX 600 closed down 0.4 percent, with Frankfurt’s DAX, which lists Europe’s largest chipmaker, Infineon Technologies AG, falling 0.6 percent.
Broadcom, one of the biggest US players in the chip sector, blamed the US$2 billion hit to its sales for this year on trade tensions and the ban on doing business with Huawei Technologies Co (華為).
The warning battered European peers as concerns about a hit to earnings from a prolonged US-China trade spat fed into fears of slowing chip demand.
Infineon, AMS AG, STMicroelectronics NV, Siltronic AG and Dialog Semiconductor PLC fell between 2.5 and 5.5 percent, and pulled the technology sector down 1.8 percent.
“This is unlikely to be Broadcom specific, but a trend to expect in the second half of this year,” said Neil Campling at technology analyst at Mirabaud Securities in London. “The outlook of a rebound for the chip sector, which many hope for, is highly unlikely to materialize.”
Earlier, Chinese data showed that industrial output growth last month slowed to a more than 17-year low and sent the eurozone bond yields to fresh lows.
However, Friday’s losses were not severe enough to erode the gains built this week on hopes that monetary easing in Europe and the US would offset the concerns over growth that drove a sell-off in May.
The STOXX 600 ended the week up about 0.4 percent, its second consecutive week of gains.
“The flight to safety in bonds isn’t all to do with the rate cut expectations. It is about taking the money out and putting it somewhere more defensive. Autos, banks and techs are the lowest, so clearly there is a rotational trade,” Mirabaud sales trader Mark Taylor said.
Mining and auto stocks, which typically fall on trade concerns, fell about 0.9 percent each.
Utilities, among sectors considered as bond-proxies, rose 0.5 percent, helped by shares of National Grid PLC, which was upgraded by Sanford C. Bernstein & Co and France’s Rubis SCA.
Brokerage recommendations also drove moves in shares, with Swedish oil firm Lundin Petroleum AB rising 2.9 percent after Goldman Sachs upgraded its shares to “buy” from “neutral.”
DKSH Holdings tumbled 10 percent after Credit Suisse Group AG downgraded shares of the Zurich, Switzerland-based consultancy to “underperform.”
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