Tech selloff drags Europe stocks lower as SAP's results disappoint

By Avinash P, Niket Nishant and Johann M ⁠Cherian

Jan 29 (Reuters) - Europe's ⁠benchmark ‍share index gave up early gains to close lower on Thursday, weighed by a selloff in technology stocks as results from Germany's SAP and U.S.-based Microsoft failed ‍to impress investors.

The pan-European STOXX 600 eased 0.2% to 607.14 points, with the ​technology sector falling 2.8% in its biggest daily drop since April 2025, when U.S. tariff hikes sparked a rout in ​global markets.

Germany's DAX underperformed other regional indexes, closing 2% lower as SAP slid 16% after its annual cloud revenue forecasts failed to meet market expectations. The German enterprise software maker's shares logged their steepest drop since ​2020.

Investors have been scrutinising tech results for clues on how companies are monetising artificial intelligence, having spent billions on developing the technology in recent years.

"A lot of it is about ​the guidance for the future and concerns about whether we can see the same pace of growth going forward," said Marija ‌Veitmane, head of equity research at State Street.

On Wall Street, investors sold shares of Microsoft and ServiceNow after their respective results also fell short of expectations.

Still, Veitmane ​said investors should not diversify out of the U.S. ⁠and out of technology stocks because that's one area where profitability is unmatched.

Earnings in the U.S. tech sector are expected to have increased 28.2% year-on-year ‌in the previous quarter, compared to an 8.3% decline for their European peers, according to data compiled by LSEG.

Geopolitics also kept markets on edge, with the euro STOXX volatility index spiking 2.3 points.

The U.S. threatened to ‌attack Iran again and concerns about disrupted supplies from the oil-rich region lifted crude prices 3% to six-month highs. ‌European energy stocks climbed 1.4%, helping offset some of the declines in other sectors.

Deutsche Bank fell 1.2% despite posting its largest annual profit since 2007 as investors weighed the implications of an ongoing probe into alleged ‍money laundering.

Finland's Nokia slumped 9.4% after the telecom gear maker issued what analysts considered cautious guidance and said that longtime chair Sari Baldauf planned ⁠to step down.

Swiss engineering group ABB surged 8.5% after posting a record quarterly order intake and giving a confident outlook for 2026, while Remy Cointreau added nearly 1% after the beverage maker's third-quarter sales returned to growth and beat market forecasts.

(Reporting by Niket Nishant, Avinash P and Johann M Cherian in Bengaluru; Editing by Shinjini Ganguli, Kirsten Donovan)

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