European shares slip as tech selloff bites, Zalando slides

By Utkarsh Hathi, Johann M Cherian and ‌Purvi Agarwal

June 26 (Reuters) - ​European shares ​pulled back from record highs on Friday, with technology shares tracking global sector weakness, while Zalando fell after Germany's financial regulator launched a probe into the retailer's accounts.

The ‌pan-European STOXX 600 index closed 0.7% lower, narrowly marking gains for the week.

Shares of ⁠Zalando slid 6.3% after BaFin launched an investigation into the online fashion retailer's 2025 financial statements, citing evidence the company ‌breached accounting regulations. The broader retail ‌sector lost 1.6%.

Meanwhile, uncertainty around the global technology sector prevailed, with investors focused on a surge in memory chip costs as a result of strong AI-driven demand. Asian equities fell sharply overnight, ​while Wall Street's tech-heavy Nasdaq flip-flopped between gains and declines.

"The AI narrative in markets right now is all over the place, shifting from questions about ROI from the AI spend, to exuberance ⁠about the AI spend," said Richard Reyle, chief investment officer at Questar Capital Partners.

"These conflicting narratives suggest that the market is in the ​process of picking winners and losers in this space, and that is a process that will take time."

In Europe, the tech sector fell 1.2%.

Chipmakers Infineon and ​STMicroelectronics slipped 4.5% each. On the other hand, semiconductor equipment ‌makers BE Semiconductor and ASML dropped 2.2% and 1%, respectively.

AI equipment maker Schneider Electric shed 1.3%. Telecom companies Ericsson and Nokia were also down 1.7% and 6.5%, respectively.

The ⁠benchmark STOXX 600 marked modest weekly gains, as easing oil supply concerns following the partial reopening of the Strait of Hormuz helped Brent crude retreat to pre-conflict levels, while Europe's smaller tech exposure helped cushion the losses seen ⁠in regional equities.

The STOXX tech index now outperforms the S&P 500 tech sector on an annual, monthly and quarterly ​basis, also due to the Wall Street index's bigger exposure to software companies.

U.S. inflation broke above 4% for the first time in three years in May, reinforcing expectations for a rate hike from the Federal Reserve this year.

Traders are ‌pricing in another 25 basis point interest rate hike by the European Central Bank by year-end, according to LSEG-compiled data.

Among others, automaker Volkswagen shares were ‌up 3.9%. A report said the company aims to slash up to 100,000 jobs over the next few years.

London-listed ⁠shares of Wise climbed 9.6% after the ‌money transfer company reported strong ​growth in customers and announced a share buyback plan worth $500 million.

(Reporting by Utkarsh Hathi, Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Sherry Jacob-Phillips, Joyjeet Das, ‌Ros Russell)

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