By Sukriti Gupta and Medha Singh
(Reuters) -European shares slipped on Wednesday after a strong start to the week, weighed down by chip supplier ASML’s warning that U.S. tariffs were increasing uncertainty around its outlook for 2025 and 2026.
The pan-European STOXX 600 index fell 1.3%, as of 0821 GMT, after two days of gains. ASML, the world’s biggest supplier of computer chip-making equipment, slumped 6.5% and was the biggest weight on the benchmark index.
Nvidia on Tuesday said it faced a $5.5 billion charge related to its most advanced chip available for sale in China as the U.S. attempts to keep ahead in the AI race.
“The fact that the tariff war now between US and China spreads beyond tariffs is bad news because it means that China itself, on its end, could opt for export inspection measures that could hit rare earth metals and commodity that are essential for chip makers and the machine makers,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.
Semiconductor firms including ASM International, BE Semiconductor, Soitec, Infineon and STMicroelectronics fell 2.7% to 4.3%.
This resulted in the European technology firms slipping 3.1%, leading declines among sectors.
Other regional indexes – Germany, France, Spain, and the UK also fell between 0.8% and 1.2%.
In contrast, defensive sectors such as utilities, food and beverages and telecoms all traded in positive territory.
An ongoing trade war waged by U.S. President Donald Trump pushed the European benchmark to a one-month low last week, with investors now turning their focus to the earnings season to gauge the fallout.
The outlook for the European corporate earnings has worsened on rising uncertainty caused by the tariffs, with analysts expecting companies to report a 3% drop in first-quarter profit, a deeper decline than the 2.2% drop expected just a week ago, according to data compiled by LSEG.
The focus is also on the European Central Bank’s policy meeting on Thursday. Markets widely anticipate a 25-basis-point rate cut from the central bank.
Among stocks, Bunzl plunged 23%, the most on the STOXX, after the British business supplies distributor cut its 2025 forecast and paused its share buyback programme, citing pressure on its North American businesses amid broader economic uncertainty.
(Reporting by Sukriti Gupta and Medha Singh; Editing by Mrigank Dhaniwala and Sonia Cheema)
