Nasdaq 100 Futures Tumble 2% as Chip Rout Deepens: Markets Wrap
(Bloomberg) — Nasdaq 100 futures tumbled 2% as the global selloff in chipmakers gathered pace, with traders rushing to exit positions in stocks that had fueled this year’s rally but whose valuations grew increasingly demanding.
Contracts for the S&P 500 also got hit, falling 1% as a closely watched exchange-traded fund tracking semiconductor firms dropped 4.4% in premarket trading. The selloff spread throughout Asia, with Taiwanese stocks falling into a technical correction and the region’s main benchmark hitting a two-month low.
In Europe, chip-linked stocks such as ASM International NV and Aixtron SE tumbled more than 4%.
Chipmakers are under growing scrutiny over whether the massive gains fueled by the buildout of artificial intelligence have run too far to justify their elevated valuations. At the heart of the matter is whether hundreds of billions of dollars in spending by AI hyperscalers will deliver lucrative returns and sustain sky-high demand for chips.
“When there’s panic, no one wants to be the last one in a selloff, so the selling pressure increases,” said Guillermo Hernández Sampere, head of trading at MPPM. “With the start of reporting, the suspicion of overvaluation has been confirmed and will continue.”
Another day of attacks and counterstrikes in the Middle East also weighed on sentiment. Brent crude is heading for its biggest weekly gain since April, with the benchmark trading just below $85 a barrel. Treasuries caught a bid despite the rise in oil prices, with the 10-year yield down three basis points to 4.53%. The dollar wavered, while gold rebounded from a two-month low.
Stock investors are taking profits in what had become crowded positions for chip-related stocks, with a key gauge of industry giants still up 68% this year. For Francisco Simon, European head of strategy at Santander Asset Management, the selloff still looks moderate in comparison to the preceding rally.
“We would distinguish between fundamentals and positioning, he said. “From a fundamental perspective, the picture remains solid: earnings momentum has been exceptional this year, and results are still coming in strongly.”
Corporate News:
Netflix Inc. forecast a second consecutive quarter of slowing sales growth, contributing to investor anxiety about the streaming giant’s future. SpaceX said it will aim to launch its Starship rocket again in a few days after aborting Thursday’s mission when some of its engines didn’t fire up, sending shares lower. Burberry Group Plc’s sales grew across all its ranges for the first time in three years after completing the first stage of its turnaround, as investors shift their focus to the brand’s efforts to drive further profitability. Volvo Car AB scrapped its target of selling more cars this year due to a sharper-than-expected deterioration in China which cut into profitability in the second quarter. The shares slumped. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.5% as of 9:25 a.m. London time S&P 500 futures fell 1% Nasdaq 100 futures fell 2.1% Futures on the Dow Jones Industrial Average fell 0.5% The MSCI Asia Pacific Index fell 2.8% The MSCI Emerging Markets Index fell 2.7% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1439 The Japanese yen was unchanged at 162.39 per dollar The offshore yuan was little changed at 6.7787 per dollar The British pound fell 0.2% to $1.3452 Cryptocurrencies
Bitcoin fell 2% to $62,790.91 Ether fell 2.4% to $1,824.79 Bonds
The yield on 10-year Treasuries declined three basis points to 4.53% Germany’s 10-year yield declined one basis point to 3.12% Britain’s 10-year yield declined three basis points to 4.93% Commodities
Brent crude rose 0.5% to $84.64 a barrel Spot gold rose 0.4% to $3,992.64 an ounce This story was produced with the assistance of Bloomberg Automation.
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