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European and Asian stocks retreated on Monday as investors worried that flagging global demand could weigh on the chipmaking sector.
Europe’s region-wide Stoxx Europe 600 fell 0.6 per cent, dragged lower by healthcare and utilities stocks, while the Cac 40 in Paris lost 1 per cent and the Dax in Frankfurt gave up 0.6 per cent, extending early-morning losses.
In Asia, Hong Kong’s Hang Seng index fell 1.4 per cent and South Korea’s Kospi declined 1 per cent, while markets in Japan were closed for a holiday. China’s CSI 300 was the only riser in the region, up 0.5 per cent.
The moves echoed a tech-led sell-off on Wall Street in the previous trading session, sparked by the news that Taiwan’s TSMC — the world’s biggest contract chipmaker — had told its main suppliers to delay delivery of high-end chipmaking equipment.
TSMC, which lost 3.2 per cent on Monday, has been warning of a deepening slowdown in the chipmaking sector, as the recent boom in artificial intelligence technology struggled to compensate for broader economic headwinds and China’s stalled recovery.
Oslo-listed Nordic Semiconductor shed 12 per cent after cutting its revenue guidance for the third quarter.
Shares of Dutch chipmaker ASML fell 1.1 per cent, STMicroelectronics gave up 1.8 per cent and BE Semiconductor lost 3.2 per cent. South Korea’s SK Hynix declined 2.8 per cent.
The moves came as traders prepared for interest rate decisions from three of the world’s largest central banks this week. In the US, the Federal Reserve is expected to keep its target range unchanged at between 5.25 per cent and 5.5 per cent.
“Further rate hikes would risk sending the economy into a hard-landing scenario,” said Thomas Simons, senior US economist at Jefferies. “Instead, the Fed can look to a strategy of maintaining current policy rates for a long time.”
Futures contracts tracking Wall Street’s benchmark S&P 500 and those tracking the tech-focused Nasdaq 100 both rose 0.1 per cent ahead of the New York open.
The Bank of England, also due to hold a rate-setting meeting this week, is forecast to increase its benchmark bank rate by a quarter of a percentage point to 5.5 per cent, while the Bank of Japan is expected to keep rates unchanged at minus 0.1 per cent.
Adding to the pressure on policymakers, headline inflation prints have recently edged up in the US and Europe, as oil prices reached their highest level of the year after top producers announced further supply cuts.
Brent crude rose 0.4 per cent to $94.32 a barrel on Monday, remaining near its highest level since November 2022, while the US equivalent West Texas Intermediate gained 0.6 per cent to $91.31 a barrel.
