[MARKET ANALYSIS] European bourses muted, with Tech benefiting from South Korea's announcement of a new AI and chip spending package

European bourses (STOXX 600 +0.1%) has started the week quietly, lacking any clear direction, unlike its peers in South Korea. Overnight, South Korea announced a new KRW 1,350tln AI and chip spending package. The total plan includes promoting a semiconductor fab worth KRW 800tln, 81tln in a packaging hub and 550tln to build AI data centres. Samsung Electronics and SK Hynix are to be heavily involved, with the two Cos planning to build two chipmaking plants each for KRW 800tln. Even though the announcement helped reverse the earlier losses (Samsung Electronics -4.8%, SK Hynix -1.7%), analysts at Morningstar think that, if the new commitments are standalone investments, they could imply material oversupply risk over the next decade.
Sectors are mixed. Technology (+1.4%) is the clear outperformer, with Media (+0.6%) and Basic Resources (+0.5%) rounding out the top 3. To the downside lie Construction & Materials (-0.8%), Food, Beverages & Tobacco (-0.6%), and Real Estate (-0.5%).
UK homebuilders are under pressure this morning, after the Guardian reported that UK Housing Minister Reed is looking into a government-run system permitted to borrow at lower rates than private developers. This would theoretically allow the state-run builder to construct commercially available properties, setting it up to compete with the likes of Taylor Wimpey (-1.2%) and Barratt Redrow (-1.4%).
Key movers include: BT Group (+1.3%), benefiting from the announcement of its 50:50 JV with Verizon despite cutting its FY27 guidance as a result; Bridgepoint (+9.4%), acquires Kayne Anderson Real Estate for c. USD 1.4bln; British American Tobacco (-1.2%), reportedly cutting 20% of jobs to bring down costs and simplify operations; Prosus (+3.1%), FY adj. EBITDA beat estimates and pledged USD 5bln of share buybacks in FY27.
US equity futures are firmer across the board, starting to rebound from last week's losses. The NQ (+1.0%) seems to be benefiting from the news in South Korea.