US Stocks Drop as Rotation Trades Are Driven by Chip Slump – Europe Market Wrap
US stocks fell as a deepening selloff in chipmakers continued, although investors rotated into sectors that have delivered the strongest earnings this season. Nasdaq 100 futures dropped 0.9%, putting the index on track for its first five-day losing streak of the year. A closely watched semiconductor ETF fell 3.7% in premarket trading, while S&P 500 futures slipped 0.2%. Real estate and healthcare stocks outperformed.
In Europe, ASML extended its weekly losses to 11% following reports of a potential Chinese state-backed rival. Despite weakness in technology, the broader Stoxx 600 edged 0.1% higher as advancing stocks outnumbered decliners by almost two to one. Earnings from Barclays, LVMH and Unilever received a mixed response from investors.
Lower oil prices helped ease inflation concerns, with Brent crude falling 2.2% to $86.40 a barrel for a third consecutive day of losses. The decline followed an ongoing pause in hostilities between the US and Iran, with investors now focused on talks between Tehran and Oman over reopening shipping through the Strait of Hormuz.
Asian markets remained under heavy pressure, with the regional benchmark moving closer to correction territory after Samsung and SK Hynix both slumped more than 13% in Seoul, extending the global rout in semiconductor stocks.
Treasuries advanced ahead of Wednesday’s Fed interest rate decision as investors pared expectations for further policy tightening over the coming year. Even so, money markets continued to price around a 30% chance of a rate hike this week as inflation risks remain elevated.
