European Market Outlook: Tech Sector Rally Losing Steam, Asian Stocks Advance

European shares are expected to decline following a mixed day on Wall Street, with growing speculation that the technology sector rally may be coming to an end. The Euro Stoxx 50 futures fell, while US contracts moved higher after several US non-tech sectors saw gains on Monday. Nvidia, a key chipmaker in the artificial intelligence revolution, extended its three-day run, reaching about $430 billion and crossing a correction threshold.

Asian stocks, however, saw advances, with Japanese stocks outperforming the region. Investors turned their focus to value stocks and redirected their attention away from the technology sector. The yen strengthened against the dollar, while treasuries remained relatively stable in Asian trading.

“As we approach the end of the quarter, global investors are rebalancing their portfolios, selling assets that have performed well recently and buying names that have lagged,” said Hideyuki Ishiguro, chief strategist at Nomura Asset Management Co. This shift in strategy is expected to support the broader market, as seen in the Topix index.

Investors will also be closely monitoring France’s main political parties as they hold a debate ahead of parliamentary elections, while Spain is set to release its May producer price index. Additionally, China saw a boost in machinery stocks after President Xi Jinping urged greater technological innovation urgency among scientists and researchers.

On the trade front, the US is investigating Chinese telecom giants over concerns regarding potential data exploitation. After a tech-led rally, experts are predicting a possible pause in US stocks. Analysts like Binky Chadha and Lori Calvasina have cautioned about downside risks despite the current market optimism.

In the commodities sector, oil prices rose amid rising geopolitical tensions, while gold fell on a weaker US dollar. Copper saw gains as investors considered the potential for stimulus measures in China.

In the cryptocurrency market, Bitcoin recovered from a recent dip, while other cryptocurrencies also saw some gains. Looking ahead, key events to watch this week include reports on consumer confidence, new home sales, industrial gains, and GDP data.

Major market movements saw a rise in S&P 500 futures and Nikkei 225 futures, with Japan’s Topix and Australia’s S&P/ASX 200 also seeing gains. Currencies remained relatively stable, with cryptocurrencies like Bitcoin and Ether showing positive movement. Bond yields and raw materials also experienced some fluctuations throughout the day.

This story was produced with the help of Bloomberg Automation and Toshiro Hasegawa’s contributions. Stay tuned for more updates on the evolving market landscape.