What is going on here?
European stocks were under pressure, with the STOXX 600 index down 0.3% as tech and luxury goods sectors struggled ahead of the European Central Bank’s policy announcement.
What does this mean?
Tech giant ASML’s stock fell 4% after disappointing 2025 revenue forecasts, shaking global confidence in chip stocks and sending tech shares down 1.2%. Meanwhile, luxury goods giant LVMH fell 7% due to lower sales in the third quarter and weaker consumer confidence in China. The decline spread to other luxury brands such as Kering, Hermès and Richemont, where sales fell by 2.1% to 5.3%. The overall personal and home goods sector shrank by 2%, with brands such as Burberry and Swatch also seeing declines. On the positive side, a sharp fall in UK inflation pushed the FTSE index up 0.6%, suggesting a potential interest rate cut. However, automaker Stellantis suffered a 2% drop despite forecasting a 20% drop in third-quarter shipments, and Adidas shares fell 3% after the results. Investors are now focused on a possible 25 basis point interest rate cut by the European Central Bank as a potential market stimulus.
Why should we care?
For the market: chips and threads under pressure.
Tech and luxury goods sectors are weighing on European markets, with ASML’s sales forecast spooking tech stocks around the world and LVMH’s struggles highlighting the sector’s vulnerabilities. These industries may continue to face headwinds as consumer confidence in China weakens, prompting investor caution.
The big picture: central banks and consumer change.
Interest rates and inflation play an important role, and the market is bracing for major changes based on central bank decisions. Expected interest rate cuts could boost optimism and liquidity in stock markets, but ongoing issues around technology and luxury goods highlight the complexities of the global economic recovery.
