LGT Navigator

Tech rout deepens as oil risks mount

A pullback in technology and semiconductor shares gathered pace on Friday, weighing heavily on Asian bourses as concerns over elevated AI investment coincided with mounting geopolitical risks. US stocks had already finished lower on Thursday, with the tech-focused Nasdaq suffering the steepest decline, while European indices ended mixed. Japan led broad losses across Asia on Friday, while South Korean exchanges were shut for a public holiday. Oil remained supported by threats to key shipping routes amid worsening US-Iran hostilities.

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

Nasdaq
© Shutterstock

Asian equity markets declined on Friday, led by a 5.2% drop in Japan’s Nikkei 225 as technology and semiconductor shares extended their global sell-off. Taiwan Semiconductor Manufacturing Company fell 5% in Taipei despite reporting strong earnings and an upbeat artificial-intelligence demand outlook, as its increased capital-expenditure plans unsettled investors. Mainland China’s CSI 300 fell 3.3% and Hong Kong’s Hang Seng Index dropped 2.5%. South Korea's markets were closed due to a public holiday.

Oil prices rise amid Iran conflict

Oil prices climbed as escalating US-Iran hostilities disrupted flows through the Strait of Hormuz and heightened the risk of a closure of the Red Sea route. Brent crude oil futures rose 0.8% to USD 84.90 per barrel and West Texas Intermediate (WTI) futures gained 1% to USD 79.70 per barrel, reversing declines from Thursday. Both benchmarks were up almost 12% this week, reflecting a growing geopolitical risk premium as Iran reportedly asked Yemen’s Houthi movement to prepare to block Red Sea oil shipments if the US attacks Iranian power infrastructure. Gold prices were edging higher on Friday, but remained below the USD 4000 mark, trading around USD 3980 per ounce, while the US Dollar Index was stable.

US stocks decline as tech weakens

US equity markets ended lower on Thursday, with the Nasdaq-100 dropping 1.6% to 29,025.77 points as investors questioned whether technology companies’ earnings can support recent artificial-intelligence-led gains. The S&P 500 fell 0.5% to 7533.77 points and the Dow Jones Industrial Average declined 0.2% to 52,552.97 points, while the continuing conflict involving Iran added to risk aversion. In macroeconomic data, initial US unemployment claims fell by 8000 to 208,000 in the week ended 11 July, Labour Department data showed on Thursday, indicating that the labour market remains resilient. The reading was below the market’s expectations and followed a rise in claims from late May through mid-June.

Euro-area trade deficit widens

The euro area recorded a EUR 7.8 billion goods-trade deficit in May, compared with a EUR 15 billion surplus a year earlier, Eurostat reported on Thursday. Imports rose 10% year-on-year to EUR 251.4 billion, while exports were broadly unchanged at EUR 243.6 billion. The deterioration reflected a wider energy deficit amid the ongoing conflict in the Middle East. European stock markets closed mixed on Thursday. The Euro Stoxx 50 gained 0.2%, while Germany’s DAX fell 0.3% and France’s CAC 40 edged down 0.1%. The Swiss Market Index declined 0.3%.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: euro-area Consumer Price Index (11:00), US building permits (14:30), US manufacturing production (15:15) and University of Michigan Consumer Sentiment Index (16:00).

LGT helps you make informed investment decisions

Global economic and market trends at a glance

You can also follow us on Facebook or LinkedIn – or visit Insights and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.

Imprint
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.