(Bloomberg) — European stocks and U.S. stock futures fell on Wednesday, with sentiment weighed down by concerns over tougher U.S. trade restrictions on China.
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A decline in technology stocks sent Europe’s Stoxx 600 lower, with Dutch chipmaker ASML Holding NV falling almost 8% as concerns about possible restrictions on its exports to China outweighed news of overbooking in the second quarter.
S&P 500 contracts fell 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. which sank the most in three months due to US-China concerns.
The Biden administration, facing pushback over its chip crackdown on China, has told allies it is considering using the toughest trade restrictions available if companies such as Tokyo Electron and ASML continue to give the country access to advanced semiconductor technology.
The pound rose to its highest level of the day against the dollar and traders trimmed their bets on an August rate cut by the Bank of England after UK inflation came in above economists’ forecasts. The Consumer Price Index held steady at the BOE’s 2% target for the second straight month in June, but showed stubborn price pressures in the services sector.
Treasury yields rose after falling on Tuesday. The dollar was stable.
Optimism that the Federal Reserve will cut rates soon, along with signs of resilience in US retail sales, has supported risk sentiment in recent sessions, while the growing possibility of a Donald Trump presidency has raised concerns over geopolitical and commercial risks.
“We have a complex matrix of leaders,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore. “Imminent Fed easing should be good for the smaller-scale and tech rotation, but by the same token, Trump 2.0 increases uncertainty related to geopolitics and trade.”
As the S&P 500 hit an all-time high Tuesday, there was a rotation in 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 rose 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 weight-loss pill. Demand A/S shares fell as much as 14% after the Danish hearing aid group warned of its full-year growth after preliminary second-quarter results missed expectations.
This week’s highlights:
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Eurozone CPI, Wednesday
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US housing starts, industrial production on Wednesday
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Fed Beige Book, Wednesday
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Fed Thomas Barkin of the Fed on Wednesday
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ECB rate decision on Thursday
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Initial US Jobless Claims, Philadelphia Fed Production, LEI Conference Board, Thursday
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The Fed’s Mary Daly, Lorie Logan and Michelle Bowman speak Thursday
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Fed John Williams, Raphael Bostic speak Friday
Some of the main movements in the markets:
INVENTORY
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The Stoxx Europe 600 was down 0.3% at 8:35 a.m. London time
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S&P 500 futures fell 0.5%
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Nasdaq 100 futures fell 0.9%
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Dow Jones Industrial Average futures fell 0.2%
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MSCI’s Asia Pacific index rose 0.3%
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MSCI emerging markets index fell 0.3%
currencies
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The Bloomberg Dollar Spot Index fell 0.1%
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The euro rose 0.1% to $1.0911
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The Japanese yen rose 0.7% to 157.18 per dollar
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The offshore yuan rose 0.1% to 7.2785 per dollar
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The British pound rose 0.2% to $1.3000
Cryptocurrencies
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Bitcoin rose 1% to $65,316.07
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Ether rose 1.3% to $3,485.52
BONDS
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The 10-year Treasury yield advanced two basis points to 4.17%
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Germany’s 10-year yield was little changed at 2.42%
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Britain’s 10-year yield advanced three basis points to 4.08%
wares
This story was produced with the help of Bloomberg Automation.
— With help from Richard Henderson.
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