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Oct. 23, 2019, 6:33 a.m. EDT

European chip stocks dragged lower after Texas Instruments’ weak outlook

Infineon, Heineken, Peugeot among stocks on the move

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By Barbara Kollmeyer, MarketWatch


AFP/Getty Images
Snowflakes fall on flags with the logo of German chip maker Infineon Technologies, which was down about 2% on Wednesday.

European stock markets struggled on Wednesday, with the tech sector weighing on them after a downbeat outlook from Texas Instruments hit the chip industry’s recovery hopes.

The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.88% slipped 0.2% to 394.04, after closing up 0.09% to 394.59 on Tuesday. On Monday, the index closed at the highest level since May 22, 2018.

The German DAX /zigman2/quotes/210597999/delayed DX:DAX +1.15%  was flat at 12761 and the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +1.01%  fell 0.4% to 5634.43. The U.K. FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.76%  bucked the trend with a 0.4% gain to 7238.90. The index was lifted by a weaker pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.0158% , which fell 0.1% to $1.2856 as investors absorbed the latest Brexit developments.

Lawmakers approved a measure advancing UK Prime Minister Boris Johnson’s Brexit deal in Parliament on Tuesday, but rejected a three-day approval timetable proposed by the government to meet the Oct. 31 deadline to leave the European Union. While analysts said chances of a no-deal exit are less likely, a lengthy delay could mean fresh elections for the country and more uncertainty.

But the bigger focus for Europe was a hefty earnings miss from Texas Instruments /zigman2/quotes/202237907/composite TXN +0.08% , which announced a new revenue estimate range that was as much as a half-billion dollars below Wall Street’s consensus forecast. Investors have been driving up chip stocks over the past few months on hopes that a turnaround was coming for the sector.

Opinion: Texas Instruments tanks the chip sector and investors’ hopes for a rebound

“TI is generally viewed as one of the more stable companies in the tech world, so I think this is a bit of a warning shot for anyone that owns any of the popular tech stocks,” Stephen Innes, Asia Pacific market strategist for AxiTrader, told MarketWatch.

Chip-maker losses in Europe were led by Germany’s Infineon Technologies /zigman2/quotes/204995926/delayed DE:IFX +3.02%  and French-Italian STMicroelectronics /zigman2/quotes/207734906/composite STM +2.46%   /zigman2/quotes/203551318/delayed IT:STM +5.06% , with both down around 2%. Dutch ASML /zigman2/quotes/206208657/delayed NL:ASML +1.26%   /zigman2/quotes/210293876/composite ASML +0.33%  fell 1%, while software stocks such as SAP /zigman2/quotes/207905606/composite SAP +0.54%   /zigman2/quotes/203458330/delayed DE:SAP +0.22%  dropped 1.3%.

U.S. stock futures /zigman2/quotes/210407078/delayed YM00 +0.01%  were modestly lower, after the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.05%  dropped 0.4% and the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.66%  fell 0.7% on Tuesday. More big earnings are on tap for Wednesday, including Caterpillar, the maker of construction and mining equipment, /zigman2/quotes/203434128/composite CAT +1.81%  and aircraft manufacturer Boeing /zigman2/quotes/208579720/composite BA +2.98%

Also lower were shares of Heineken /zigman2/quotes/205347870/delayed NL:HEIA +1.81% , after the beer maker reported a rise in nine-month net profit, but guided slightly lower for full-year organic operating profit.

Shares of ABB /zigman2/quotes/209404356/composite ABB +1.03%   /zigman2/quotes/202291450/delayed SE:ABB +0.22% jumped 3.6% after the Swiss industrial group posted lower net profit and revenue as weak market conditions affected its robotics and automation business. However, the company sees improved operating margins for the full year.

Shares of Peugeot /zigman2/quotes/203546414/delayed FR:UG +2.37%  rose 2% after the French auto maker reported higher revenue for the third quarter, which it said was boosted by launches of new models.

Akzo Nobel /zigman2/quotes/209835399/delayed NL:AKZA -1.37%  jumped 2% after the Dutch paintmaker announced a €500 million ($556 million) share buyback plan and higher operating income.

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kr478.42 billion
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80.82
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Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.

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