European equities struggled for direction on Wednesday as investors weighed a sell-off in semiconductor stocks, stronger corporate earnings, rising oil prices and the approaching Federal Reserve decision.
BRUSSELS, July 29, 2026 — Updated before the Wall Street opening
European stock markets were mixed in early afternoon trading on Wednesday, with investors reluctant to take large positions before the opening bell in New York and a closely watched Federal Reserve decision later in the day.
The pan-European STOXX 600 moved between small gains and losses during a volatile session. After falling by about 0.3% in morning trading, the index recovered towards the flat line. At the latest available delayed reading, the FTSE 100 was up approximately 0.3%, while the Euro STOXX 50 was down around 0.3%.
The mixed performance concealed substantial differences between sectors. Technology shares came under renewed pressure, while energy companies, luxury groups and several major European banks provided support.
Semiconductor stocks weigh on Europe
Technology was the weakest part of the European market as investors questioned whether the heavy spending associated with artificial intelligence will continue to produce sufficiently strong returns.
ASM International shares fell sharply despite the semiconductor-equipment company issuing an encouraging forecast. The decline followed disappointing market reactions to results from South Korean chipmaker SK Hynix, whose quarterly performance was strong but failed to meet increasingly demanding investor expectations.
The reaction illustrates a broader change in market psychology. Strong revenue or profit growth is no longer always enough to lift technology shares when valuations already reflect years of anticipated AI expansion.
Investors are now waiting for Microsoft and Meta Platforms to report their results after the US closing bell. Particular attention will be paid to capital expenditure, data-centre investment and evidence that AI products are beginning to generate returns capable of justifying the industry’s enormous spending programmes.
Oil rally supports European energy shares
Energy stocks were among the strongest performers as renewed tension involving the United States and Iran pushed oil prices sharply higher.
Brent crude surged as the conflict threatened to disrupt production and transport routes. The rise supported European oil and gas companies, but it also created a less favourable backdrop for the wider economy.
Higher energy prices could raise operating costs, weaken consumer purchasing power and complicate the fight against inflation. They may also make it more difficult for central banks to lower interest rates, particularly if the increase in oil prices proves persistent.
European government-bond yields moved higher, with Germany’s ten-year yield rising as investors assessed the inflationary implications of the latest geopolitical developments.
Kering leads a luxury-sector rebound
Kering was one of the session’s most notable gainers. Its shares rose by double digits after the decline in second-quarter sales at Gucci proved less severe than analysts had feared.
The figures offered some reassurance that demand for premium products remains more resilient than recent valuations had suggested. LVMH also received support after reporting an increase in sales, helping the luxury sector resist the broader caution affecting European equities.
The reaction to Kering nevertheless appears to reflect improved expectations rather than a complete recovery at Gucci. Investors will continue to monitor the brand’s restructuring, product strategy and performance in China and the United States.
European banks deliver stronger results
Several large banks advanced following encouraging quarterly reports.
Deutsche Bank shares rose after the lender announced higher second-quarter profit, beating expectations for a decline. UBS also gained after reporting a 17% increase in quarterly profit and plans to repurchase up to $3 billion of shares by the middle of next year.
The results suggest that leading European banks continue to benefit from relatively supportive interest margins and disciplined cost management. However, performance was not uniformly positive across financial services. Aberdeen shares declined after the asset manager reported considerably larger fund outflows than expected.
Elsewhere, Glencore gained following a 15% increase in first-half copper production, while French technology-services company Sopra Steria rallied after raising its full-year revenue-growth target.
Wall Street futures edge higher ahead of the Fed
US equity-index futures pointed to a cautiously positive opening for the S&P 500 and Nasdaq. However, trading remained restrained as investors awaited both the Federal Reserve announcement and results from major US technology companies.
The Fed is widely expected to leave interest rates unchanged. The market’s reaction may therefore depend less on the decision itself than on the accompanying statement and any indication of the central bank’s next move.
Rising oil prices introduce an additional complication. A prolonged energy shock could slow economic activity while simultaneously keeping inflation above target—a combination that would reduce the Fed’s room to support growth through lower interest rates.
What investors should watch after the opening bell
Four factors are likely to determine whether European shares strengthen or retreat during the final hours of trading:
The performance of US semiconductor stocks: another decline could deepen losses among European technology companies.
Oil prices: further gains would support energy shares but increase inflation concerns.
US bond yields: a sharp move higher could weigh on growth stocks and other highly valued assets.
Positioning before the Federal Reserve decision: investors may reduce risk as the announcement approaches.
The European session therefore presents a divided picture rather than a broad market sell-off. Strong corporate results are supporting selected luxury, banking, mining and energy shares, but the technology sector remains vulnerable to doubts about AI investment and elevated valuations.
With US markets about to open, Europe’s next move is likely to be determined in New York.
Market levels are intraday indications and may be delayed by at least 15 minutes. This article is for information purposes only and does not constitute investment advice.
Sources
Reuters — European shares slip as tech weakness offsets Kering boost
Reuters Markets — Global market prices and US pre-market coverage
Trading Economics — Euro Area Stock Market Index
Eurostat — Official European statistics release calendar
