As the Chip Route Deepens, Nasdaq Futures Fall 1.5% – Europe Market Wrap
Nasdaq 100 futures tumbled 1.5% as the global selloff in chipmakers gathered pace, with traders rushing to exit positions in stocks that had fueled this year’s rally but whose valuations grew increasingly rich. S&P 500 contracts were also under pressure, falling 0.8% as an ETF tracking semiconductor firms dropped 2% in premarket trading. The rout extended throughout Asia, with Taiwanese stocks falling into a technical correction and the region’s main benchmark hitting a two-month low. Declines were more measured in Europe, where tech exposure is lower.
Chipmakers are under growing scrutiny over whether massive gains fueled by the AI buildout have run too far to justify their elevated valuations, with the key question being whether hundreds of billions of Dollars in hyperscaler spending will eventually deliver strong returns and sustain elevated demand for chips.
Another day of attacks and counterstrikes in the Middle East also weighed on sentiment, with concerns growing that the US and Iran will intensify hostilities, making oil tanker operators wary of transiting the Strait of Hormuz. Brent is heading for its biggest weekly gain since April, trading near $85/bbl. Treasuries caught a bid despite the rise in oil prices, sending the 10Y yield 3 bps lower to 4.52%.
The Dollar fluctuated, while gold rebounded from a November low. Traders continued to dial down expectations for Fed rate hikes this year.
