Europe midday: Defence stocks slump as Germany reportedly pulls frigate contract

(Sharecast News) - European shares were down at midday on Wednesday as the tech-sell off continued, while defence stocks were in focus on a report that the German navy had ditched plans to build a fleet of frigates.

The pan-regional Stoxx 600 index was down 0.05% to 634 at 1200 BST.

Germany's DAX slumped 1.14% after Der Speigel reported Germany plans to abandon a multibillion-euro project to abandon plans to build six F126 frigates in its biggest commission since the Second World War and buy eight smaller vessels from German manufacturer TKMS, which are significantly smaller than the F126.

Rheinmetall slumped 17%. The company had been expected to become the lead contractor of the F126 frigate program in a deal worth as much as �12.8bn. It would have taken over the contract from Dutch shipyard Damen Naval after years of delays.

Elsewhere US indices closed lower on Tuesday as a global selloff in chip names deepened. The broad retreat follows a sharp reversal in tech sentiment that began at the start of the week and has since accelerated across global markets, with South Korea's benchmark, which was up 95% this year, down almost 10%, while Japan's Nikkei 225 shed 3.55% - breaking an eight-session winning streak.

"The technology stocks, especially those that spiked in a parabolic move, are being battered due to their massive AI spending, increasingly financed by debt, with an unclear path to profitability for some of them, and the prospects of higher interest rates that will increase the cost of debt in the months to come," said Swissquote analyst Ipek Ozkardeskaya.

"Note that the unease in US tech stocks started after the latest Federal Reserve announcement, which came in more hawkish than expected, as the new chair Kevin Warsh put 'price stability' at the centre of his statement. The dot plot suggested that half of the Fed members are looking for at least one rate hike this year to tame inflation, which spiked above 4% last month for the headline figure and remains near the 3% mark for the core figure."

Oil prices fell as US President Donald Trump tried to shift attention away from his handling of the Iran war and its impact on the domestic economy by accusing big oil companies of "gouging" consumers and threatening a Department of Justice probe.

"The big Oil Companies are not dropping their price at the pump commensurate with the sharply lower prices they are paying for Oil. Those prices are dropping like a rock! In other words, customers are being "gouged." I have instructed the DOJ to immediately start looking into this. Gasoline prices better start going down a lot faster than what I'm seeing! President DJT," he wrote on social media.

Brent crude was down 1.41% to $76, while US benchmark West Texas Intermediate fell 1.35% to $72 a barrel.

In equity news, shares in Segro surged as US logistics firm Prologis said the warehouse landlord rejected its �12.6bn all-share takeover proposal.

Reporting by Frank Prenesti for Sharecast.com