European shares were subdued on Thursday as renewed worries over tech valuations after Oracle's weak forecast offset investor relief from the U.S. Federal Reserve's less-hawkish-than-anticipated commentary. The pan-European STOXX 600 (.STOXX), opens new tab was up a marginal 0.2% at 579.07 by 0922 GMT. Major regional bourses were broadly higher, with France's CAC 40 (.FCHI), opens new tab up 0.6% and London's FTSE 100 (.FTSE), opens new tab up 0.1%.
Technology stocks (.SX8P), opens new tab shed 0.3%, with German software giant SAP (SAPG.DE), opens new tab dropping 2.6% in the wake of Oracle's (ORCL.N), opens new tab underwhelming performance. The U.S. cloud computing firm missed analysts' estimates for both sales and profit, triggering broader market concerns. Oracle's disappointing results re-ignited concerns about lofty valuations in the technology sector and the artificial intelligence segment's struggle to convert substantial spending into profits, something that had already rattled global equity markets in early November.
"Oracle has been at the epicentre of the AI financing debate, lacking the mammoth cash flows of the more traditional cloud giants... the baby's going out with the bathwater," said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
Utilities stocks (.SX6P), opens new tab lost 0.7%, dragged by a 5.4% slide in Naturgy (NTGY.MC), opens new tab after BlackRock sold a 7.1% stake in the Spanish gas utility for around 1.7 billion euros. The Fed's Wednesday meeting, in which the central bank cautioned against further interest rate cuts in the near term until there is more clarity on the labour market, offered some relief to the markets, with investors viewing the comments as less hawkish than expected.
"The decision came out softer than investors had expected... the Fed is still keeping the door ajar for new rate cuts, and their updated forecasts paint a Goldilocks scenario for the economy with high growth and not too high inflation," said analysts at Sydbank. Industrials (.SXNP), opens new tab and banks (.SX7P), opens new tab, which have been the biggest boosts to the index of late, rose 0.6% and 0.2% respectively, leading gains.
Schneider Electric (SCHN.PA), opens new tab climbed 3.8% after planning a share repurchase programme of up to 3.5 billion euros ($4.1 billion) through 2030, its first in nearly three years, and aims to increase its adjusted core profit margin in the same period.
Among other movers, Delivery Hero (DHER.DE), opens new tab fell 5.6% after Citigroup downgraded the stock to "sell" from "neutral" after a near 14% surge on Wednesday. London's Drax (DRX.L), opens new tab gained 1.1% after it forecast annual profit at the top end of market estimates, while RS group (RS1R.L), opens new tab topped the STOXX 600 after a rating upgrade from J.P.Morgan, up 4.2%.
