U.S. inflation data in September exceeded expectations, driving up global interest rates. European stock markets declined on October 15, continuing the sell-off seen in U.S. stocks and Asian tech stocks the previous night. The yield on 10-year U.S. Treasury bonds rose to 5.266%, and higher global financing costs put pressure on high-valued tech stocks. The Stoxx 600 index in Europe fell by about 0.35%, Germany's DAX index dropped by 0.5%, and France's CAC 40 index fell by 0.2%. The semiconductor sector saw particularly significant declines, with ASML falling by about 6.4%, ASM International dropping nearly 10%, and Infineon falling by about 8.6%. Despite ASML previously announcing strong earnings and raising its full-year revenue forecast, this was not enough to prevent a collective correction in tech stocks.

U.S. inflation exceeding expectations drives up bond yields, European semiconductor stocks slump collectively

In September, the U.S. Consumer Price Index ( CPI ) rose 3.7% year-on-year, and the core CPI rose 2.6% year-on-year, both exceeding market expectations, prompting investors to re-evaluate the Federal Reserve's future interest rate path.

After the data was released, the yield on 10-year U.S. Treasury bonds rose to 5.266%, further increasing the valuation pressure on global tech stocks. For companies that rely on future earnings growth to support their high valuations, rising long-term interest rates mean a decrease in the present value of future cash flows, and financing costs may also increase further.

European semiconductor companies became the main targets of selling off. ASML fell by about 6.4%, ASM International fell by about 9.8%, the token issuance of BE Sem and STMicroelectronics both fell by more than 7%, and Infineon fell by about 8.6%.

Previously, ASML announced strong third-quarter results and expected continued revenue growth in the fourth quarter, which briefly boosted market sentiment on Wednesday. However, as global bond yields rose, investors reduced their holdings of semiconductor equipment manufacturers, chip companies, and other high-valued tech stocks again on Thursday.

Strong financial reports cannot withstand valuation pressure; European companies' profit forecasts are under test

The market had hoped that the third-quarter earnings season would provide support for European stock markets, but recently there has been a divergence in corporate performance.

The French luxury goods group LVMH previously announced that its sales in the third quarter fell short of expectations, reflecting the pressure of weak consumer demand on the luxury goods business.

The semiconductor industry presents a different situation. Although ASML announced strong financial results and raised its revenue guidance for 2026 from €43 billion to €44 billion, the market still focuses on the demand prospects of end markets that are not related to AI.

This puts European stock markets under dual pressure: on one hand, rising interest rates directly compress the valuation space of companies with high valuations; on the other hand, companies need to demonstrate through sustained growth in earnings and profit margins that their current stock prices are supported by fundamental factors.

European bond yields remain high, suppressing risk appetite in the stock market.

In addition to changes in U.S. interest rates, pressures in Europe's own bond market also affected the recovery of stock valuations.

European Central Bank officials have recently maintained a cautious policy stance, and the issue of French sovereign debt continues to attract attention. ECB President Christine Lagarde has explicitly denied speculation regarding the central bank's possible intervention in the French sovereign debt market.

Against the backdrop of high financing costs and widening yield spreads on sovereign bonds in some European countries, investors' demands for economic growth and corporate profitability have further increased.

The decline in European stock markets this time indicates that market attention is shifting from AI related orders and revenue growth to the rationality of valuations and the ability to realize profits in a high-interest-rate environment. With global interest rate expectations rising again, even if some semiconductor companies report strong performance, it is difficult to completely offset the selling pressure faced by the tech sector.