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Tech shares tumble

US technology shares fell on Tuesday as a sharp sell-off in AI-linked stocks dragged Wall Street lower, while Asian equities were steadier on Wednesday despite lingering concerns over stretched valuations. European equities also closed mostly lower on Tuesday, with the Euro Stoxx 50 dropping 1.3%. Gold remained under pressure as the US dollar strengthened on expectations of tighter Federal Reserve policy, with investors now looking ahead to Micron’s quarterly results on Wednesday and US PCE inflation data on Thursday.

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

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Asian equities traded in a narrow range on Wednesday as easing Middle East tensions helped sentiment, but concerns over stretched technology valuations kept gains in check after the previous session’s global AI-driven sell-off. Korea’s Kospi rebounded 3.5%, partly recovering from Tuesday’s nearly 10% slump, while Japan’s Nikkei 225 fell 0.4% as investors weighed signals from the Bank of Japan’s June meeting that pointed to further rate increases after last week’s move to 1%. Australia’s ASX 200 gained 0.2% after May inflation data showed headline price growth slowed from April, although underlying inflation accelerated and remained above the Reserve Bank of Australia’s 2% to 3% target. Hong Kong’s Hang Seng Index gained 0.6% and mainland China’s CSI 300 rose 0.6%.

Gold falls as dollar strengthens

Gold prices extended their decline on Wednesday, with spot gold falling 0.7% to USD 4080 an ounce as a stronger US dollar and rising expectations of Federal Reserve rate increases hurt demand for the non-yielding metal. Bullion has now fallen in five of the past six sessions and comes after three consecutive weekly declines, while the dollar index reached a 13-month high above 101 points, as markets raised bets on tighter US monetary policy following last week’s Fed meeting. Easing concerns over Middle East supply disruptions also reduced support for haven assets, although investors remain focused on US PCE inflation data due on Thursday for further signals on the Fed’s policy path. Brent crude oil and West Texas Intermediate (WTI) both eased, trading around USD 76 and USD 73 per barrel, respectively, while US Treasury yields were largely stable midweek.

US tech stocks tumble

US technology shares fell sharply on Tuesday, with the Nasdaq 100 dropping 3.3% to 29,347.27 points as a sell-off in Asian tech stocks triggered profit-taking in AI-linked names. The S&P 500 lost 1.4% to 7365.46 points, while the Dow Jones Industrial Average was little changed at 51,666.84 points, reflecting its lower exposure to technology companies. Attention is now turning to Micron’s quarterly results on Wednesday as a gauge of whether the AI-driven rally can be sustained. In macroeconomic data, US private employers added an average of 30,750 jobs per week in the four weeks to June 6, up from 26,500 in the previous four-week moving average, according to preliminary ADP data released on Tuesday. The increase marked the first acceleration in hiring since May 2, when the weekly average stood at 40,750.

Transatlantic PMI gap widens

The gap in business activity between the US and the euro area widened in June, according to S&P Global flash Purchasing Managers' Index (PMI) data released on Tuesday, as the US Composite PMI rose to 52.2 from 51.5 in May while the euro-area index increased to 49.5 from 48.5 but remained in contraction territory. US growth was supported by a stronger manufacturing performance, with the Manufacturing PMI rising to 55.7 from 55.1, whereas euro-area weakness persisted despite a modest improvement in services, as its services gauge rose to 48.9 from 47.7. The data suggest the US private sector retained firmer momentum than the euro area at the end of the second quarter.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Micron Technology.

Economic data in focus: German ifo Business Climate Index (10:00), US building permits (14:30), Swiss National Bank Quarterly Bulletin (15:00), US new residential sales (16:00), US crude oil inventories (16:30).

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