European Shares Poised For Lower Open As Tech Selloff Returns

(RTTNews) - European stocks may open on a sluggish note Friday as AI rally momentum waned amid challenging macroeconomic conditions.

Goldman Sachs said in a research report that a downturn in AI capex or a spike in equity and bond volatility could trigger a "catch down" reversal and that the equity market today is 'one big trade' rather than 'a market of stocks.'

U.S. stock futures edged lower and Asian markets were deep in the red on concerns over soaring memory chip costs for buyers and volatile chip sector.

Brent crude prices fell nearly 2 percent below $74 a barrel in Asian trading, reversing the previous session's gains.

Gold headed for a fourth consecutive weekly loss, weighed down by a resurgent U.S. dollar on hawkish Fed bets.

The yield on the 10-year U.S. note hovered near seven-week lows after Federal Reserve Bank of New York President John Williams said that monetary policy is "well positioned" for the current economic environment, suggesting the Fed may not need to be as hawkish as priced in by markets.

At the same time, Williams pushed back the expected return to the Fed's 2 percent inflation target from 2027 to 2028.

Separately, Chicago Federal Reserve President Austan Goolsbee said that inflation is still trending the wrong way but there has been some improvement on the services inflation.

Investors may also track the latest developments in the Middle East after a Singapore-flagged cargo ship came under attack while transiting the Strait of Hormuz. Iran's Islamic Revolutionary Guard Corps warned ships against using any Hormuz route not approved by Iran, calling alternative passages 'highly dangerous and prohibited'.

The International Maritime Organization (IMO) said its evacuation plan will be paused until safety assurances could be secured for both the ships involved in the evacuation and commercial vessels operating in the region.

Meanwhile, Iraq denied reports suggesting that the country was weighing withdrawal from OPEC due to disagreements over production limits. Iraq's Ministry of Oil later stated that Baghdad remains committed to seeking changes to its production quota.

Elsewhere, the Council of the European Union has formally adopted two regulations implementing the tariff commitments set out in the EU-U.S. joint statement of 21 August 2025.

Overnight, U.S. stocks ended mixed even as strong earnings and guidance from Micron and Qualcomm helped ease concerns over lofty AI valuations and spending.

In economic news, the PCE price index, the Federal Reserve's preferred inflation gauge, rose 0.4 percent sequentially in May, slightly below expectations, and 4.1 percent year-over year.

The core PCE index rose 0.3 percent month-over-month and 3.4 percent annually, matching forecasts.

Consumer spending accelerated in May and personal income surpassed market expectations, reinforcing expectations that the Federal Reserve may raise interest rates later this year.

Durable goods orders, a key indicator of manufacturing activity, declined less than anticipated in the most recent reporting period, while claims for unemployment benefits fell more than expected last week, suggesting that the labor market remains robust.

Q1 GDP growth was unexpectedly revised up to an annualized rate of 2.1 percent in the first quarter of 2026 from 1.6 percent in the second estimate and 0.5 percent growth recorded in the fourth quarter.

The tech-heavy Nasdaq Composite dropped half a percent, extending losses for a fourth consecutive session after Apple and Microsoft raised the prices of some of their core products, citing higher component costs. The S&P 500 finished marginally lower while the Dow edged up by 0.1 percent.

European stocks closed higher on Thursday as chip stocks and other companies with exposure to AI infrastructure rebounded from recent string of losses.

The pan European Stoxx 600 climbed 0.8 percent to reach a record high. The German DAX rallied 1 percent, France's CAC 40 surged 0.6 percent and the U.K.'s FTSE 100 added 0.7 percent.