Memory Chip Stocks Selloffs Drag Wall Street, European Markets Mixed
Mirroring global markets’ swing, Wall Street dipped as selling pressure in memory chips, semiconductors, and other AI-linked stocks dragged key indexes lower ahead of US inflation data.
Renewed doubts about AI investment returns and intensifying Chinese semiconductor competition pressured global technology shares yesterday, as investors awaited US inflation data for guidance on Federal Reserve policy.
Wall Street closed softer, with the S&P 500 little changed, the NASDAQ down 0.15% and the Dow Jones off 0.35%, as memory stocks extended losses and financials weakened after earnings, a stockbroking and portfolio management subsidiary of First National Bank (FNB) said in a brief.
SK Hynix and Micron Tech stocks tumbled as buying sentiment waned amid uncertainties around capital spending and earnings.
The same technology concerns erased Europe’s early gains, pushing the Euro Stoxx 50 down 0.55%, while the FTSE 100 was little changed as London’s limited technology exposure and support from BP offset mining weakness.
Asian trading is mixed this morning with investors also digesting China’s below forecast inflation numbers. The Hang Seng Index is up 0.26%, and the Nikkei 225 is up 0.58%, with chipmakers rebounding after recent losses.
Australia’s ASX 200 closed 0.64% lower as financials, consumer durables and transport weighed ahead of labour data, alongside a decline in the country’s leading index
The Johannesburg Stock Exchange (JSE) is set for a flat-to-positive open Wednesday with global futures edging up while Asian markets are trading unevenly ahead of US inflation data.
Tencent’s 0.61% gain offers a positive read-through for Naspers and Prosus, but the 0.85% decline in the S&P/ASX 300 Metals and Mining Index points to pressure on local resource counters.
On the commodities side, firmer Brent and palladium should support energy and PGM counters, while flat gold and weaker rand-denominated gold prices may constrain gold miners.
The JSE closed broadly higher on Tuesday, with the All-Share Index gaining 0.60% and the Top 40 advancing 0.59.
Financials drove the upside, surging 1.24%, driven by broad-based buying across banking stocks (+1.27%) as South African 10-year bond yields fell as oil prices slipped, thus easing near-term inflation concerns ahead of National Treasury’s weekly bond auction.
Industrials added 0.49%, lifted notably by Clicks Group, which surged 9.5% after JPMorgan upgraded the stock to overweight, citing a decisive reversal in its pricing gap versus Dis-Chem. Resources lagged, rising just 0.23%.
Though not being a major source of pressure, the market also mulled the International Monetary Fund’s warning of elevated global financial system risks, including the potential for an AI-related market correction and cyber threats, which somewhat tempered broader risk appetite.
European Stocks Rally as AI Bears Drag S&P 500, Nasdaq Lower
