(Bloomberg) — European stocks and US equity futures fell Wednesday, with sentiment under pressure from concerns over stricter American trading curbs on China.
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A slump in technology stocks led Europe’s Stoxx 600 lower, with Dutch chipmaking machine company ASML Holding NV tumbling almost 8% as worries about potential restrictions on its exports to China outweighed news of estimate-beating orders in the second quarter.
S&P 500 contracts dropped 0.5%, while those on the Nasdaq 100 fell 0.9%. MSCI’s Asia Pacific Index pared gains, with semiconductor equipment maker Tokyo Electron Ltd. sinking the most in three months on the US-China concerns.
The Biden administration, facing pushback to its chip crackdown on China, has told allies that it’s considering using the most severe trade restrictions available if companies such as Tokyo Electron and ASML continue giving the country access to advanced semiconductor technology.
The pound rose to the day’s high against the dollar and traders trimmed their bets on an August rate cut from the Bank of England after UK inflation came in above economists’ forecast. The Consumer Prices Index held steady at the BOE’s 2% target for a second straight month in June, but showed stubborn price pressures in the services sector.
Treasury yields ticked higher after their declines on Tuesday. The dollar was steady.
Optimism that the Federal Reserve will cut rates soon, alongside signs of US retail resilience, has supported risk-on sentiment in recent sessions, while the increasing chance of a Donald Trump presidency has raised concerns over geopolitical and trade risks.
“We have a complex matrix of drivers,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore. “Impending Fed easing ought to be good for rotation into smaller cap and tech, but equally, Trump 2.0 raises the uncertainty associated with geopolitics and trade.”
While the S&P 500 notched a fresh all-time Tuesday, there has been a rotation into smaller US stocks. The Russell 2000 Index rose 12% in the five sessions through Tuesday, its best showing since April 2020.
In other corporate news Wednesday, Adidas AG rallied 5% after raising its annual profit target for the second time in three months. Roche Holding AG jumped as much as 7.4% after promising early-stage study results for its experimental weigh-loss pill. Demant A/S shares slumped as much as 14% as the Danish hearing-aids group warned on its full-year growth after preliminary second-quarter results missed expectations.
Key events this week:
Eurozone CPI, Wednesday
US housing starts, industrial production, Wednesday
Fed Beige Book, Wednesday
Fed’s Thomas Barkin speaks, Wednesday
ECB rate decision, Thursday
US initial jobless claims, Philadelphia Fed manufacturing, Conference Board LEI, Thursday
Fed’s Mary Daly, Lorie Logan and Michelle Bowman speak, Thursday
Fed’s John Williams, Raphael Bostic speak, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.3% as of 8:35 a.m. London time
S&P 500 futures fell 0.5%
Nasdaq 100 futures fell 0.9%
Futures on the Dow Jones Industrial Average fell 0.2%
The MSCI Asia Pacific Index rose 0.3%
The MSCI Emerging Markets Index fell 0.3%
Currencies
The Bloomberg Dollar Spot Index fell 0.1%
The euro rose 0.1% to $1.0911
The Japanese yen rose 0.7% to 157.18 per dollar
The offshore yuan rose 0.1% to 7.2785 per dollar
The British pound rose 0.2% to $1.3000
Cryptocurrencies
Bitcoin rose 1% to $65,316.07
Ether rose 1.3% to $3,485.52
Bonds
The yield on 10-year Treasuries advanced two basis points to 4.17%
Germany’s 10-year yield was little changed at 2.42%
Britain’s 10-year yield advanced three basis points to 4.08%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson.
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