Tech stocks lead losses in Europe on rate decision jitters

  • Tech Stocks Lead Losses
  • Philips will cut 13% of jobs to increase its profitability
  • STOXX 600 down 0.6%

Jan 30 (Reuters) – European stocks fell on Monday as cautious investors anticipated a series of interest rate hikes by major central banks this week, with shares in rate-sensitive sectors, including technology, among the main laggards.

The pan-European STOXX 600 (.STOXX) was down 0.6% at 09:55 GMT. However, optimism surrounding better-than-expected corporate earnings and economic resilience put the benchmark on track for a monthly gain of 6.3%, after losing nearly 13% in 2022.

“This week could well be the pin that brings out this month’s rally and injects a dose of realism into market expectations,” said Michael Hewson, chief market analyst at CMC Markets UK.

Money market bets show the US Federal Reserve set to raise its key rate by 25 basis points (bp) to 4.50%-4.75% on Wednesday, while the European Central Bank (ECB) and Bank of England (BoE) are seen raising rates by 50 basis points each to 2.50% and 4.0%, respectively, on Thursday.

The European technology index (.SX8P) was the most depressed among the sectors, down 2.1%, with chipmakers ASML Holding NV (ASML.AS) and ASM International NV (ASMI.AS) leading the way. head drops.

“There is a slowdown in demand for chips…and there are fears that any slowdown in demand will ripple through to earnings after a big rally at the end of last year and in early January” , said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. said.

Philips (PHG.AS) climbed 6%, after the Dutch health-tech company reported better-than-expected fourth-quarter core profit and said it would cut an additional 6,000 jobs worldwide to restore its profitability.

Earnings for STOXX 600 companies likely jumped around 10% in the fourth quarter, from 14.5% in early January, while revenue growth is largely muted, according to Refinitiv data.

By contrast, German renewable energy firm PNE AG (PNEGn.DE) fell 16.2%, after Morgan Stanley’s infrastructure investment arm (MS.N) told the board of PNE AG that it was no longer pursuing discussions with potential buyers of Photon’s stake in PNE.

The German economy unexpectedly fell in the fourth quarter, a sign that Europe’s largest economy could be entering a much-anticipated recession following the war in Ukraine. The German DAX (.GDAXI) fell 0.6%.

Investors will also be watching Eurozone consumer confidence for January and Belgium’s gross domestic product in the fourth quarter.

Reporting by Ankika Biswas and Bansari Mayur Kamdar in Bengaluru; Editing by Janane Venkatraman and Rashmi Aich

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