(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…
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