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Chip sell-off intensifies

Technology shares remained under pressure on Wednesday as elevated long-term US borrowing costs and geopolitical concerns prompted investors to reassess richly valued AI companies. Wall Street closed lower on Tuesday, led by the Nasdaq-100, while the retreat accelerated across Asian markets, with South Korean and Japanese equities suffering particularly sharp losses.

  • Date
  • Auteur Shane Strowmatt, Senior Investment Writer
  • Temps de lecture 5 minutes

DRAM memory chips
DRAM memory chips © Shutterstock

Asian equities declined on Wednesday as higher bond yields and persistent Middle East tensions prompted investors to cut exposure to technology stocks. South Korea’s Kospi fell 5.6% to 6487.31 points after gaining more than 2% on Tuesday, with SK Hynix down 9.2% and Samsung Electronics losing 7.4%. Japan’s Nikkei 225 dropped 3.3%, while Australia’s S&P/ASX 200 fell 0.2%, mainland China’s CSI 300 declined 2.5% and Hong Kong’s Hang Seng Index was little changed. US 30-year Treasury yields retreated slightly but remained near their highest level since 2007, reducing the appeal of highly valued growth shares, while yields on 10-year and 2-year US debt were still trading around 4.7% and 4.2%, respectively. The US Dollar Index continued to fall, trading around 99.5 points, while gold was little changed at around USD 4340 per ounce and Brent crude oil futures rose 0.6% to USD 91.59 per barrel.

US tech shares retreat as yields rise

US equities declined on Tuesday as higher long-term bond yields and rising oil prices amid the Iran war curbed risk appetite. The Nasdaq-100 dropped 1.7% to 29490.96 points, while the S&P 500 lost 0.7% to 7691.76 and the Dow Jones Industrial Average fell 0.2% to 53343.40. Chipmakers were particularly weak, with Nvidia down 2.3% and the Philadelphia Semiconductor Index losing 5%, as investors took profits from AI stocks.

German investor sentiment strengthens

German investor confidence rose to 34.2 points in August, up 7.9 points from July, according to the ZEW survey released on Tuesday. The assessment of current conditions improved by 16.5 points but remained deeply negative at minus 61.1 points. ZEW attributed the more optimistic outlook partly to strong quarterly corporate results, robust exports and the government’s infrastructure investment programme, while exceptionally low Rhine water levels pose a risk to activity. Sentiment towards the euro area also improved, with its expectations gauge rising 8 points to 31.4 points. European equities declined on Tuesday, with the Euro Stoxx 50 down 0.9% to 6468.85 points, Germany’s DAX falling 0.8% to 26128.36 and France’s CAC 40 losing 0.8% to 8509.36 points. The Swiss Market Index rose 0.1% to 14320.90 points.

UK unemployment eases

The UK unemployment rate fell to 4.9% in the second quarter, down 0.1 percentage points from the preceding three months but 0.2 points higher than a year earlier, data released on Tuesday showed. Payroll employment declined by 78,000 in the year to June, and job vacancies fell by 6,000 to 707,000 in the three months to July, suggesting that employers remain cautious amid higher labour and operating costs.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Lowe's, Straumann, and TJX.

Economic data in focus: UK Consumer Price Index (08:00), European Central Bank President Christine Lagarde speaks (09:10), euro-area Consumer Price Index (11:00) and Federal Reserve monetary policy meeting minutes (20:00).

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Editor: Alessandro Fezzi
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