Technology pushes European shares to three week lows

Technology stocks pushed European shares to three-week lows on Thursday after software firm SAP reported poor results, the latest company to warn about damage from protracted trade tensions as gloom about earnings spreads across global equities.

Shares in Europe’s most valuable tech company dove 6% after it said investors would have to wait till next year for a major improvement in margins as the business software group reported a 21% fall in quarterly operating profit.

That added to nerves around the first batches of corporate results in Europe and the United States this week and sent Germany’s DAX to a one-month low. The pan-European stocks benchmark index fell 0.5% by 0832 GMT.

Global stock markets have been recovering strongly from a sharp correction in May driven by concerns about the impact of U.S. President Donald Trump’s trade war with China on growth.

But a combination of earnings nerves, and some slightly stronger economic numbers which may prevent central banks from weighing in with more monetary policy pump-priming, have weakened sentiment globally in the past week.

The Wall Street Journal reported overnight that progress toward a U.S.-China trade deal has stalled while the Trump administration determines how to address Beijing’s demands that it ease restrictions on Huawei Technologies.

That, along with some other disappointing earnings, including those for video streaming leader Netflix on Wednesday, drove losses on both Wall Street and Asian markets.

The European tech sector was down 2%, and was on course to post its worst day in almost two months after the SAP and Netflix results.

Earlier in the day, MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.3%, with Tokyo’s benchmark Nikkei tumbling 2.0%, its biggest oneday fall in four months.

Oil prices were mixed, with U.S. crude extending losses after data showed U.S. stockpiles of gasoline and other products rising sharply last week, suggesting weak demand.