European shares traded in a muted range on Tuesday as concerns over high valuations in global AI-linked stocks kept investors cautious.
Markets also watched a NATO summit in Turkey, where new government defence contracts were expected to remain in focus.
European Shares Trade Flat
The pan-European STOXX 600 index was little changed at 650.84 points by 0713 GMT.
The index had closed below record highs in the previous session, as investors became more cautious after the recent market rally.
Tech Stocks Lead Losses
The technology sector was the weakest performer, falling 1.6%.
Chip equipment maker ASML and semiconductor firm Infineon both dropped around 4%.
The losses reflected broader concerns that AI-related stocks may have become overvalued after a strong rally in recent months.
Siemens Energy Falls After Barclays Downgrade
Siemens Energy fell 5.5% after Barclays downgraded the stock.
The brokerage cut its rating to “underweight” from “equal-weight.”
The downgrade added further pressure to Europe’s AI-related equipment stocks.
AI Valuation Concerns Weigh on Sentiment
European technology shares followed a weaker mood across global markets.
Investors remained concerned that the recent rally in chip stocks had pushed valuations too high.
In Asia, shares of Samsung Electronics fell despite strong earnings forecasts.
Meanwhile, U.S. Nasdaq futures slipped nearly 1%, adding to the cautious tone.
Defence Stocks in Focus
The defence sector traded slightly higher as investors watched the NATO summit.
European countries were expected to announce fresh defence deals in response to U.S. pressure for higher defence spending.
The sector has been the strongest performer on the STOXX index so far this month.
Saab Rises After Morgan Stanley Upgrade
Swedish defence equipment maker Saab jumped 5.3%.
The move came after Morgan Stanley upgraded the stock to “overweight” from “underweight.”
The upgrade helped support investor interest in European defence shares.
Shell Gains After Q2 Outlook Update
Among other major movers, Shell rose 2.2%.
The energy giant gained after slightly raising its second-quarter Integrated Gas outlook.
The update helped lift sentiment around the stock despite the broader cautious market backdrop.
