European shares trade flat with global trade worries weighing on tech stocks

London — European shares traded flat on Wednesday as worries over global trade persisted, with sentiment towards semi-conductor stocks, in particular, souring after Micron Technology was banned from selling chips in China.

The pan-European STOXX 600 index closed flat with Germany’s exporter-heavy DAX and the UK’s FTSE 100 falling both 0.3%. Trading has been choppy before a July 6 deadline when the US is set to impose tariffs on $34bn worth of goods from China.

The tit-for-tat saga has hit market sentiment in recent weeks. News that a Chinese court temporarily banned Micron Technology from selling chips in China, the world’s biggest memory chip market, hit semi-conductor stocks.

“The biggest risks to the technology sector are regulation and global semi-conductor disruption from an escalating trade war,” Peter Garnry, head of equity strategy at Saxo Bank, said.

Europe’s tech sector fell 1.4%, the worst sectoral performance. Chip maker STMicro was down 3% and Infineon 1.8%. Silicon wafer-maker Siltronic dropped 7%. Recent guidance cuts from BE Semiconductor and Osram Licht have also weighed on sentiment around the sector, which has fallen more than 9% since June’s 17-year high.

Smaller Swiss stock Comet, which focuses on X-ray and radio frequency technology, issued a sales and profit warning for 2018 and saw its shares plunge nearly 20%.

Elsewhere, shares in Danske Bank were down about 2%. A report citing fresh data in the bank’s Estonian money-laundering case suggests its extent is greater than previously reported. Danske Bank head of group compliance, Anders Meinert Jørgensen, said: “We have indicated on several occasions that the extent appears to be somewhat bigger than what has previously been reported.”

More broadly, gains across defensive sectors limited losses on the STOXX. Telecoms rose 1.8% and utilities 0.6%.

Reuters