European stock markets remained relatively stable on Tuesday as continued weakness in technology shares offset strong corporate earnings from consumer goods, luxury and automotive companies. The pan-European STOXX 600 index was little changed at 645.32 by 0703 GMT, reflecting cautious trading as investors awaited key developments including the U.S. Federal Reserve's policy decision and earnings from major U.S. technology companies. Tech shares extended their decline, falling 0.8% after dropping nearly 2% in the previous session, tracking a broader global selloff in semiconductor shares following reports that China has begun producing domestically developed immersion deep-ultraviolet (DUV) lithography machines. The reported breakthrough raised concerns over increasing competition in the semiconductor equipment market, with ASML shares falling 2% in early European trading as investors reacted to the development.
Despite technology sector pressure, gains in consumer and luxury companies helped limit broader market losses. The personal and household goods sector rose 1.8%, led by Unilever, whose shares jumped 5.3% after the company reported stronger-than-expected second-quarter sales growth. The performance was driven by higher product volumes and improved pricing, according to Reuters. Luxury group LVMH also advanced 2.5% after posting a 3% increase in second-quarter sales, supported by resilient demand from U.S. consumers. Mercedes-Benz shares climbed 3.3% after the German automaker reported a 22% increase in second-quarter operating profit, beating market expectations, though the company warned that its core passenger car business continues to face headwinds.
Investor focus has now shifted to a series of major market catalysts later this week. Several large U.S. technology companies are set to report quarterly earnings, with markets closely watching whether the artificial intelligence-driven rally can continue. Attention is also centered on the U.S. Federal Reserve's monetary policy announcement on Wednesday, which is expected to provide fresh clues on the outlook for interest rates and global financial markets. The combination of mixed sector performance and upcoming global events has created a cautious trading environment, with lower oil prices continuing to provide support while technology sector concerns persist.
