European shares pause after rally as concerns over Fed rates, Iran peace deal linger

European shares slipped ​on Wednesday, after a strong finish to the second quarter, as investors assessed indications that U.S. interest rates ‌could stay higher for longer, and the progress of U.S.-Iran peace talks.

The pan-European STOXX 600 index  closed 0.4% lower after logging its strongest quarter since October 2020 in the previous session.

The STOXX tech index  pulled back 1.2% after logging its strongest quarterly performance since late 2001 in the ​previous session, with valuations now at par with Wall Street rivals.

Chip equipment maker ASML  dropped 4.6%, while semiconductor ​stock Soitc  slipped marginally.

AI equipment maker Schneider Electric lost 3.1% after signing an agreement to acquire Cognite ⁠Holding, a privately held AI software and industrial data provider, for $3.1 billion in an all-cash deal.

"We still like the ​tech sector even going forward... It will keep being some sort of a driver, both in terms of earnings ​growth and performance," said Luca Finà, head of active equity at Generali Asset Management.

Finà expects the earnings growth differential between European and U.S. stocks to narrow in the upcoming quarters, potentially bringing back international flows and powering strong performances in Europe.