Europe: Shares close out best week since June as earnings soften blow from tech sell-off

European shares concluded their best week since late June, recovering from a tech sell-off. The Stoxx 600 index increased by 0.7% to 644.74 points, marking its highest level in over three weeks. Analyst Daniela Hathorn noted that diversification proved beneficial as the concentrated US technology trade faced pressure. Tech stocks declined due to concerns about increased debt reliance for AI infrastructure development and competition from China, but strong performances from ASML, Aixtron, and Ericsson boosted sentiment.

LSEG forecasted third-quarter earnings for Stoxx 600 companies to grow 20.7% year-over-year, slightly lower than the previously anticipated 21% growth. Some companies, such as SAP, ABB, and Barclays, are set to release results next week. Aixtron surged 6% after surpassing third-quarter order intake estimates and confirming annual guidance.

Nordex rose 12.3% following a better-than-expected third-quarter profit and an upward revision of its full-year margin forecast. Schneider Electric saw its shares drop 1.8% after raising its 2026 profit and revenue targets for the second time. Tech sector performance remained unchanged, while the healthcare sector declined 0.3% after gaining over 4.6% in the previous two sessions.

Meanwhile, Nestlé increased 1.7% after receiving an "overweight" rating from JPMorgan. The food and beverages index rose 1.4% as a result. The eurozone's September Harmonised Index of Consumer Prices inflation reading was 3.8% year-on-year, matching economists' expectations but exceeding the European Central Bank's 2% target, indicating ongoing price pressures.

The ECB raised borrowing rates by 50 basis points to 2.5% in December to address inflation driven by higher oil prices. Investors anticipate another rate hike at the December meeting, according to LSEG.