[MARKET ANALYSIS] European bourses slump after renewed Middle East strikes and further tech selloff

European bourses (STOXX 600 -0.6%) have continued to slide following last week's selloff, with renewed geopolitical tensions over the weekend and a further Asia-Pac tech selloff weighing on sentiment. Over the weekend, Israel struck Lebanese targets despite US President Trump urging Israeli PM Netanyahu to refrain from strikes. In retaliation, Iran launched missiles at Israel and has now resulted in back-and-forth fire between the two sides.
On the tech front, AI/chip darlings KOPSI (-8.3%), Nikkei 225 (-3.7%) and TAIEX (-1.3%) slumped in Asia-Pac trade as investors take profit on fears the recent bull run has gone "too-far, too-fast". The initial selloff was spurred by disappointing Broadcom guidance, but now renewed hostilities in the Middle East and further hawkish Fed pricing after the strong jobs report.
Sectors highlight the negative sentiment. Energy (+0.9%) is the only sector printing decent gains, benefiting from the surge in WTI/Brent (+4.5%). Underperformance comes in Construction & Materials (-1.8%), followed by Retail (-1.4%) and Industrial Goods & Services (-1.4%).
Plenty of M&A updates over the weekend: Tate & Lyle (+13%) agrees to be acquired by Ingredion for GBP 2.7bln; Frasers Group (-0.8%) is considering GBP 500mln bid for Metrocentre; BMPS (+11.5%) receives a EUR 30.6bln takeover bid from Intesa Sanpaolo a day after Banco BPM put in an offer; Bouygues-led consortium reaches a EUR 20.4bln deal to buy Altice's SFR.
US equity futures rebound from last week's losses, with surprising outperformance in the NQ (+0.7%) after the index had its worst-performing week since April 2025. Over the weekend, Nvidia CEO Huang said the AI revolution is just the beginning and the recent chip stock plunge is a buying opportunity. The Co. also announced a multi-year technology partnership with SK Hynix covering next-gen memory for Nvidia AI servers, PCs and robotics.