European markets opened lower on Friday, as weakness in technology stocks overseas combined with regulatory scrutiny on a major online retailer to pull indices back from recent highs.
The pan-European STOXX 600 fell 0.46% to 637.27 as of 0711 GMT, stepping back from the record-high close it posted in the previous session. Despite the early retreat, the benchmark remained positioned for a weekly gain.
Zalando led headline moves in retail after shares of the online fashion group dropped 4.4% following a probe by Germany's financial regulator, BaFin. The authority said it had opened an investigation into Zalando's 2025 financial statements, pointing to evidence the company breached accounting regulations. The broader retail sector lost 0.5% in early trade.
Pressure on technology stocks was pronounced, reflecting uncertainty about the sector globally. Market participants were focused on a sharp rise in memory-chip costs, which market commentary linked to strong AI-driven demand. The trend fed through to Asian markets, which fell sharply overnight, while Wall Street's tech-heavy Nasdaq futures were down around 1%.
In Europe, the technology sector dropped 1.5% on the open. Several chipmakers moved lower - Infineon and STMicroelectronics slipped 2.9% and 3.2%, respectively. Semiconductor equipment names were also weaker, with BE Semiconductor down 3.5% and ASML off 1.2%.
Telecommunications stocks fell alongside broader tech weakness; Ericsson was down 1% and Nokia declined 2.1% on the session. Auto shares were not immune to the rout, sliding 0.4% as investors considered the potential implications of higher memory-chip costs for vehicle makers.
Market context - Early selling was concentrated in technology-related names and retail after the regulatory action on Zalando. The mix of a regulatory probe and supply-cost concerns for chips created a cautious tone across sectors sensitive to semiconductors and consumer demand.
What to watch - Investors will be monitoring any developments from BaFin regarding Zalando's accounting inquiry and further moves in memory-chip pricing, as both factors are likely to influence tech, auto and retail sector performance in the near term.