Luxury Slide Shadows Tech Surge: European Shares Struggle

European shares are struggling to maintain momentum amid a retreat in luxury stocks influenced by LVMH's cautious outlook. While tech stocks hit new highs with robust AI demand, concerns about economic recovery persist. Investors await guidance from the U.S. Federal Reserve as trade deals offer potential future benefits.

European shares took a hit on Wednesday, with the overall mood dampened by a decline in luxury stocks. LVMH's cautious tone caused the pan-European STOXX 600 index to slip by 0.5% as luxury shares fell 3.2%, marking a four-day losing streak, while tech stocks enjoyed a 1.6% increase to their highest point in over 25 years.

The trading day emphasized the sectoral divergence despite investor reliance on corporate earnings amidst ongoing geopolitical and trade uncertainties. LVMH, alongside Gucci's Kering, Moncler, and Hermes, saw notable declines after LVMH CEO Bernard Arnault's cautious outlook, whereas ASML's robust bookings shone a light on resilient AI demand, driving its stock to rise by 4.3%.

Investors remain alert as they look for signals from the U.S. Federal Reserve's imminent policy decision, while broader trade talks with India present long-term opportunities for European auto stocks despite current market stagnation.

(With inputs from agencies.)