Cautious Markets Amid NATO Summit and AI Valuation Concerns

European shares remained flat as investors showed caution due to high AI-related stock valuations. The pan-European STOXX 600 index showed little movement, with technology shares taking hits. Meanwhile, the NATO summit in Turkey focused on potential defense contracts, contributing to defense sector gains, while tech stocks faced declines.

In a tentative trading day on Tuesday, European shares hovered steady as concerns over high valuations in AI-related stocks kept investors vigilant.

The highlight was the pan-European STOXX 600 index's minimal change at 650.84 points by 0713 GMT. Notably, the technology sector experienced a 1.6% decline, led by falls in ASML and Infineon shares.

The NATO summit in Turkey caught the eye of the defense sector, which outperformed amid expectations of new contracts under U.S. influence. Meanwhile, Sweden's Saab saw a significant 5.3% rise, thanks to Morgan Stanley's upgrade.