Chip Sector Decline Drags European and Asian Markets Lower

Chip Selloff Triggers Turbulence Across European and Asian Financial Markets

Market Overview and Key Developments

Here’s a preview of today’s European and global markets, courtesy of Rae Wee.

Asian Markets Respond to Chip Sector Downturn

The chip selloff continued into Friday, hitting Taiwanese and Japanese equities hardest, whereas South Korean stocks were unaffected due to a market holiday.

Despite TSMC posting better‑than‑expected 77% earnings growth the prior day, investor sentiment remained sour, dragging the Taiwanese foundry’s shares down 4%.

European Futures Indicate Increased Volatility

The Asian downturn set the stage for a shaky European open, with EUROSTOXX 50 futures down 0.9% and DAX futures slipping 0.6%.

Investor Sentiment and IPO Activity

Following a strong year‑to‑date performance, investors are retreating from heavily crowded semiconductor positions, renewing worries about outsized AI expenditures.

Investor wariness was evident in the tepid response to Chinese memory‑chip maker CXMT’s $8.6 billion IPO, whose oversubscription ratio fell well below that of recent Chinese listings.

Geopolitical Tensions and Market Impact

US-China Relations

On Thursday, former President Donald Trump released declassified intelligence claiming it demonstrated Chinese meddling in U.S. elections, reigniting his longstanding election‑security allegations even though U.S. intelligence agencies found no proof that Beijing influenced the 2020 vote he lost.

Markets largely shrugged off the claims, yet Trump’s inflammatory rhetoric toward China threatens to destabilize a relationship that had stabilized after the previous year’s costly trade war.

Trump has expressed a desire to meet with Chinese President Xi Jinping in September to discuss improving trade ties.

Middle East Developments

Middle‑East hostilities persisted, with Iran announcing fresh strikes on U.S. Gulf installations on Friday following six straight nights of American attacks on Iranian military sites.

Chinese Regulatory Actions

In China, the foreign‑exchange regulator announced on Friday that it is issuing new quotas for qualified institutional investors seeking to invest abroad, after a recent crackdown on illicit cross‑border capital movements.

Key Events to Watch

Economic Data Releases

Key data releases that could sway markets on Friday include:

US Economic Indicators

– U.S. import prices, industrial production and housing data

Corporate Earnings

– Company earnings including Swedbank, Danske Bank, Sweco, Volvo, Burberry Group

Government Debt Auctions

– Reopening of 1‑month, 3‑month and 6‑month UK government debt auctions

(Editing by Sonali Paul)

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