Europe midday: Stoxx rallies despite tech sell-off, EZ GDP revision

(Sharecast News) - European shares rallied on Friday despite a sell-off in tech stocks in the US and Asia overnight and a contraction in eurozone GDP.

The pan-regional Stoxx 600 index was up 0.33% in early deals to 626 at 1213 BST.

Investors looked to limit their exposure to artificial intelligence stocks after a gloomy forecast from Broadcom on its AI chips.

"Disappointing guidance from Broadcom regarding its AI chip business didn't resonate well among chipmakers - and broader markets - yesterday," said Swissquote analyst Ipek Ozkardeskaya.

"Meanwhile, stress in the private credit market has been creeping into the headlines, and the Middle East news remains as muddy and uncertain as ever."

The sell-off hit chipmakers and related firm with Infineon Technologies, BE Semiconductor, ASML, ASM International and STMicroelectronics all down.

Meanwhile, the eurozone economy unexpectedly contracted in the first quarter of 2026, according to figures released on Friday by Eurostat, which revised its initial estimates to reflect the first drop in economic activity in more than three years.

Eurozone GDP declined by 0.2% over the first three months of the year, according to final estimates, compared with the flash and secondary estimates in April and May showing 0.1% growth.

The contraction followed a 0.2% expansion in the fourth quarter of 2025 and 0.3% growth in the third quarter and was the first quarterly decline in activity since the fourth quarter of 2022.

It was also the sharpest quarter-on-quarter fall in GDP since the middle of 2022.

According to Eurostat, the sharp downwards revision was a result of a much steeper downturn in Ireland than initially reported, where GDP slumped 12.1% - the sharpest quarterly contraction on record, though mainly due to a drop in exports from a number of multinational pharmaceutical groups headquartered there.

Reporting by Frank Prenesti for Sharecast.com