The wave of selling in technology stocks is picking up speed. Germany's DAX and the EuroStoxx50 were each about 1% lower around midday Friday, at 24,679 and 6,207 points. Chip-related names such as Infineon, Aixtron and Siltronic were under particular pressure, falling about 5% to 7%. The European technology sector index lost around 3%. Futures for the tech-heavy indexes on Wall Street were also in the red.

Investors are increasingly worried, experts say, that the strong rally in companies tied to artificial intelligence (AI) was overdone. In addition, the unwinding of leveraged positions is intensifying the correction, said Jürgen Molnar, strategist at broker Robo Markets. "Many investors played the AI boom on borrowed money. Now those bets are being unwound," the expert explained. "Profit-taking is colliding with forced selling, a cocktail that is further increasing selling pressure and could extend the correction process."

TECH EARNINGS IN FOCUS, OIL PRICE CONTINUES TO RISE

Experts say the key for the next move is the earnings season now getting underway in the U.S. tech sector. The kickoff came Thursday evening from streaming service Netflix, which spooked investors with its outlook. The shares slid almost 10% in premarket U.S. trading. "When disappointing results collide with high valuations and already bruised sentiment, it leads directly to selling," commented portfolio manager Thomas Altmann of asset manager QC Partners.

In the oil market, prices pushed higher after renewed attacks in the Middle East. North Sea crude Brent and U.S. light crude WTI each rose about 1.5% to $85.28 and $80.26 per barrel (159 liters). On the week, both are up about 12%, the biggest gain in about three months. Drivers include increasing attacks between the U.S. and Iran that are restricting oil trade through the Strait of Hormuz, as well as Iran's call for the Houthi militia to prepare for a closure of the export route via the Red Sea. "The risk that the Red Sea becomes another flashpoint for supply disruptions further complicates the outlook for the global oil market," commented Tim Waterer, chief analyst at broker KCM.

BAFIN REVIEW WEIGHS ON DERMAPHARM

Among individual stocks, shares in solar equipment group SMA Solar were in demand, rising 11% after well-received results. By contrast, Dermapharm shares slipped about 2.5%. Financial watchdog BaFin is taking a closer look at the drugmaker's financial statements.

In Stockholm, Volvo Cars shares fell 6.6%. The Swedish automaker, majority-owned by China's Geely, suffered a sharp profit drop in the second quarter. Volvo Cars is now hoping for a recovery driven by deliveries of the new EX60 electric model.

Investors were also not convinced by the business update from British luxury fashion group Burberry. The shares fell about 4% in London, making them the biggest losers in the FTSE 100. Burberry posted revenue growth in the latest quarter thanks to strong demand in the U.S. and China. However, the war in Iran curbed spending by tourists in Europe.

(Report by Sanne Schimanski, edited by Ralf Banser. For questions, contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and economic data) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)