European Stocks Snap Four-Day Winning Streak as Tech Selloff and U.S.-Iran Tensions Weigh
Miles Bennett
The pan-European STOXX 600 fell 1.8% this week, ending four consecutive weeks of gains; a tech sell-off collided with escalating U.S.–Iran military conflict, forcing the market to reprice the complacency built up during the rally.
What triggered this sell-off?
The U.S. and Iran exchanged military strikes this week. Washington simultaneously reimposed sanctions on Iranian oil, lowering expectations for a near-term easing of energy-supply risks.
Empower Investments chief investment strategist Marta Norton said: "There was a degree of complacency that war was no longer an issue." This means → geopolitical risk never left; the rally just masked it.
At the NATO summit in Turkey, President Trump called Spain a "terrible partner" and threatened to halt trade. He later softened his tone, but the damage to sentiment was already done.
Why is tech bearing the brunt?
The tech sector dropped 1.8% for the week, with a further 1.3% fall on Friday alone. French semiconductor firm Soitec slid 5.9% on Friday; Dutch lithography giant ASML fell 2.1%.
Julius Baer senior market analyst Ipek Ozkardeskaya noted: "The sharp swings in tech show that investors remain under pressure given elevated valuations."
In plain terms = the market is doing one thing — spreading chips that were concentrated in AI leaders across other sectors. This sell-off is not about tech being bad; it is about tech being too expensive and too crowded.
What is going wrong at Volkswagen?
Volkswagen fell for a third straight session. Reuters, citing two insiders, reported that the company's powerful labor representatives blocked a major restructuring plan.
Separately, data released the same day showed global vehicle deliveries fell 8.6% year-on-year in Q2 — the steepest quarterly drop in nearly four years. This means → sales and internal reform are stalling at the same time, compounding fundamental pressure on VW.
Which stocks bucked the trend?
Vodafone surged 12.6% after UAE telecoms group e& announced it would sell its Vodafone stake to the family group of French billionaire Xavier Niel, lifting the telecom sector 1.3% overall.
UK budget carrier easyJet soared 14.3% on an agreed-in-principle takeover bid from Apollo Global Management valued at £5.7 billion (roughly $7.65 billion).
JPMorgan turned "constructive" on European steel, upgrading ArcelorMittal from underweight to neutral — its shares rose 6.4%. Voestalpine and Salzgitter each gained over 6%, both double-upgraded to overweight.
What comes next?
St. James's Place was the STOXX 600's biggest loser, falling 8.5%, after reports that Sovereign Wealth — one of its largest partner firms — is considering leaving the group. This reflects how quickly single-client dependency can punish a stock harder than the broader index.
All eyes now turn to the upcoming earnings season. In plain terms = whether tech valuations are "expensive for good reason" or just "expensive" needs actual results to answer. That makes earnings the key test for whether European equities can resume their rally.
Content is for reference only, not financial advice.