European stocks drifted lower Wednesday as investors stepped back from a global market rally after disappointing earnings from Apple Inc. (AAPL - Get Report) and weaker U.S. car sales put investors in a cautious mood ahead of today's meeting of the U.S. Federal Reserve.
The region-wide Stoxx Europe 600 benchmark slipped by around 0.1% in the opening hour of trading, with tech and industrial sector shares leading the declines. Germany's DAX performance index was marked 0.11% lower, with shares in Volkswagen AG (VLKAY) one of the session's biggest decliners despite its better-than-expected first quarter profit tally and VW sales surge.
Currency markets have also been active in both the Asia and European session, with both the euro and the pound holding onto gains against the greenback even as the U.S. dollar index found favour in overnight Asia trade ahead of today's Fed meeting, with investors betting that chairwoman Janet Yellen will provide more specific signals for a June rate hike.
However, with the pound trading at a near six-month high of 1.2922, and oil prices still on the back foot despite an overnight rebound, Britain's FTSE 100 was marked 0.3% lower at 7,228 points by 09:15 BST.
Tech sector shares were also under pressure following Apple (AAPL - Get Report) 's surprise fall in second quarter iPhone sales, which rippled through stock markets around the world amid concerns for demand of its flagship product.
Shares in Dialog Semiconductor (DLGNF) , a key Apple supplier, were marked 1.8% lower at €42.05 each in Frankfurt, after slumping as much as 3.3% in the opening minutes of Frankfurt trading, extending its three-month decline to more than 5%. Dialog is a long-time supplier of power management ICs (PMICs) used in iOS devices. Dialog gets close to three-quarters of its sales from Apple.
Other companies in the Apple supply-chain were also under pressure Wednesday, with chipmaker STMicroelectronics (STM - Get Report) falling 1.77% to €14.86 and AMS International (AMSSY) , which supplies optical sensors to both Apple and Samsung, was marked 1.24% at €54.68 in Amsterdam. Infineon Technologies (IFNNY) edging down 0.24% to €18.92 each in Frankfurt.
An upward mover of note in European trading were shares of Novo Nordisk A/S (NVO - Get Report) , which rose more than 6.5% to a year-to-date high of Drk282.3 after the world's biggest insulin maker posted stronger-than-expected first quarter earnings and boosted its full-year guidance.
The European moves contrast a relatively tepid session overnight in Asia, where the region-wide MSCI Asia ex-Japan index fell 0.09% but remained within touching distance of a two-year high in limited trading, with markets in Hong Kong and South Korea closed for religious celebrations. Markets in Japan were also closed, and will remain so for the remainder of the country's Golden Week holidays.
Nonetheless, investors were buoyed by solid underlying economic data from both Europe and the United States, as well as the strength of tech sector earnings -- outside of Apple Inc. (AAPL - Get Report) - with optimism lifting stocks and taking the dollar to multi-week highs against a basket of six global currencies.
Apple's mixed earnings report, however, dampened some of the sector's enthusiasm as the world's largest tech company missed analysts' estimates for first quarter revenue growth and fell short of forecasts for sales of its iconic iPhone.
The downdraft has, for the moment, weighed on U.S. equity futures, with the Dow Jones Industrial Average priced to open 38 points lower at the opening bell and the S&P 500 poised to fall 4.75 points. The tech-heavy Nasdaq is priced for a sharper 19 points decline.
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