Tech selloff continues to run deeper ahead of European trading
Japan’s Nikkei 225 index is now down 6% on the day as the tech selloff from Wall Street yesterday bleeds over to Asia. And things look to be getting worse with US futures also deeply in the red today as S&P 500 futures fall by 0.8% and Nasdaq futures now down 1.5% today.
The broader risk mood managed to catch a bit of a breather from the softer US CPI and PPI reports earlier this week. But now, things are all coming undone again with semiconductors and chipmakers leading losses. This continues the broader trend since the turn of the month, after a bit of a recovery in late June.
The fact that the US-Iran conflict is starting up again and inflation worries are creeping in just adds to the more negative backdrop. That especially with Treasury yields climbing back up too, especially short-term yields. So far today, yields are settling lower after the pushing and pulling this week with perhaps some flight to safety to bonds being a consideration.
But at the balance, a more hawkish Fed outlook will continue to fuel more selling in Treasuries and keep yields underpinned. And that in turn will be another headwind for equities to keep holding up.
The latest selloff though might be in part a technical one too. I would argue that the steep losses since overnight trading comes as we see semiconductors break some key technical lines. The likes of Intel, Micron, and Sandisk have been under the microscope lately. And from the charts, we can see that they are breaking key necklines that look to be exacerbating losses now:
Not to mention that the poster boy for the AI trade i.e. Nvidia is also seen down over 2% in overnight trade now. Meanwhile, AMD is also down 3% with shares poised to drop to fresh five-week lows as indicated in overnight trade.
This article was written by Justin Low at investinglive.com.