European stocks rise as Asia reels from chip selloff

European equity markets opened higher on Tuesday, defying a brutal semiconductor-driven selloff that swept through Asia overnight, as strong corporate earnings and relief from falling oil prices supported investor sentiment across the continent.

Markets Diverge From Asia's Tech Rout

The FTSE 100 opened 0.23% higher on Tuesday morning, with Unilever ↘ 1.22% leading gains after reporting better-than-expected second-quarter results. Germany's DAX gained around 0.5%, rising above 25,500 in early trading, while France's CAC 40 added 0.42%.tradingeconomics+4

The gains stood in stark contrast to Asia, where MSCI's Asia Pacific Index fell as much as 3.6% to its lowest level since May. South Korea's Kospi plunged amid circuit breakers being triggered on the Kosdaq, while Japan's Nikkei 225 briefly dropped more than 2,000 yen into the 62,000-yen range. The rout was driven by growing doubts over the return on massive artificial intelligence spending and fears that Chinese progress in chipmaking equipment could intensify global competition.features.financialjuice+2

The Philadelphia Semiconductor Index had already fallen for a third consecutive session in the United States, with Samsung and SK Hynix both dropping more than 11% in Seoul.reuters+1

Earnings and Oil Provide London Support

Analysts attributed Europe's resilience partly to the region's relatively low exposure to the semiconductor sector, a dynamic that also shielded European stocks during a similar chip selloff in mid-July.reuters

Strong corporate results further bolstered London's market. Unilever shares rose as much as 6.8%, the most in two years, after reporting beats on second-quarter sales and volumes. Barclays ↘ 2.72% also hiked its annual guidance after better-than-expected quarterly results. Man Group ↗ 0.00%, which reported half-year results on Tuesday, added to the positive earnings backdrop.global.morningstar+2

Falling oil prices provided additional relief. Brent crude dropped sharply on Monday after the United States and Iran paused strikes over the weekend, raising hopes of a diplomatic solution to their conflict, according to Reuters. The decline followed President Donald Trump's announcement that the U.S. had suspended military operations to allow more time for diplomacy.reuters+1

Rate Uncertainty Lingers

Despite the calmer tone in Europe, traders remained alert to broader risks. Nasdaq 100 futures fell 0.85% ahead of the U.S. open, and the Federal Reserve's interest rate decision looms on Wednesday, with markets pricing roughly a 38% chance of a 25-basis-point hike.economymiddleeast+1