European shares moved slightly lower on Thursday as weakness in artificial intelligence stocks weighed on global market sentiment.
Investors also remained cautious ahead of the latest U.S. employment report, which could influence expectations for Federal Reserve interest-rate policy.
European Stocks Edge Lower
The pan-European STOXX 600 index fell 0.1% to 638.27 points by 07:04 GMT.
The decline followed sharp losses in AI-related shares across Asian markets and Wall Street.
Technology stocks had recorded strong gains during the previous quarter. However, those advances also pushed valuations higher, leaving the sector vulnerable to profit-taking.
Technology Sector Leads Losses
The STOXX 600 technology index dropped 1.5%, making it the weakest-performing sector in Europe.
Soitec shares fell 5.1%, while Aixtron declined 3.6%.
The broader European market held up relatively well because technology companies represent a smaller share of regional indexes than they do in the United States.
As a result, the AI stock selloff had a more limited effect on the overall STOXX 600.
AI Stock Weakness Spreads Globally
Artificial intelligence stocks had already come under pressure in Asia and the United States.
The pullback followed a strong end to the previous quarter, when investor enthusiasm pushed many AI and semiconductor shares sharply higher.
The latest decline suggests that investors are reassessing whether current valuations can be supported by future earnings and AI spending.
Sodexo Shares Rise After Forecast Upgrade
Sodexo moved against the broader market trend.
Shares in the French food services company climbed 6.5% after it raised its full-year organic revenue growth forecast.
The company cited stronger-than-expected performance during the third quarter.
The positive update helped offset some of the weakness across European technology stocks.
US Jobs Report Takes Center Stage
Investor attention will now turn to the June U.S. nonfarm payrolls report.
The employment figures could provide fresh clues about the strength of the U.S. labor market and the future direction of interest rates.
A stronger-than-expected report could support expectations that borrowing costs will remain elevated.
In contrast, weaker job growth could increase speculation that the Federal Reserve may adopt a more accommodative policy stance.
Federal Reserve Policy Remains in Focus
Economic data is becoming increasingly important for financial markets.
The Federal Reserve has indicated that it plans to reduce its reliance on forward guidance.
This means investors may receive fewer direct signals about future policy decisions.
As a result, employment data, inflation figures, and other economic indicators could have a greater influence on market expectations.
European Markets Await Fresh Direction
European stocks may remain sensitive to movements in technology shares and upcoming U.S. economic data.
The June payrolls report could determine whether the current market caution deepens or investors return to riskier assets.
For now, weakness in AI stocks and uncertainty over interest rates continue to limit gains across European markets.
