Global markets faced fresh turbulence Friday as a widespread selloff in semiconductor stocks rolled through Asia and set the stage for a shaky opening in Europe, according to a morning markets report from Rae Wee.
Stocks in Taiwan and Japan took the heaviest hits from the ongoing chip market downturn, while South Korean markets were closed for a holiday and avoided the damage.
Even a blockbuster earnings report couldn’t rescue sentiment. TSMC, the massive Taiwanese chip manufacturer, posted earnings growth of 77% — well above expectations — yet its shares still dropped 4% as investors remained unconvinced.
The ripple effects reached Europe quickly. EUROSTOXX 50 futures dropped 0.9%, and DAX futures fell 0.6% ahead of the trading day.
After a strong run for semiconductor stocks this year, investors have started stepping back from crowded positions in the sector, with renewed worries about heavy spending on artificial intelligence coming back into focus.
Adding to the cautious mood, the Chinese memory chip company CXMT saw its $8.6 billion initial public offering draw far less investor interest than most recent Chinese IPOs, with a lower-than-expected over-subscription rate.
On the political front, U.S. President Donald Trump on Thursday declassified intelligence documents he said demonstrate that China interfered in American elections. The move revived his repeated claims about election security, even though a U.S. intelligence assessment previously found no evidence that Beijing had any impact on the 2020 election, which Trump lost.
Financial markets largely shrugged off Trump’s accusations, but analysts warned that his sharp rhetoric toward China could destabilize a relationship that had been slowly recovering after last year’s damaging trade war. Trump has expressed hope to sit down with Chinese President Xi Jinping in September to discuss improving trade ties between the two nations.
Conflict in the Middle East also continued to simmer. Iran announced Friday that it had launched new attacks against U.S. facilities in the Gulf, coming after a sixth straight night of American strikes on Iranian military sites.
In China, the country’s foreign exchange regulator announced Friday it would be issuing new investment quotas for qualified institutional investors looking to put money overseas — a move that follows a recent crackdown on illegal cross-border money transfers.
Key items to watch Friday that could move markets include U.S. import price data, industrial production figures, and housing statistics. Earnings reports are expected from Swedbank, Danske Bank, Sweco, Volvo, and Burberry Group. The United Kingdom is also reopening auctions on one-month, three-month, and six-month government debt.
