(Bloomberg) — European equities fell as weak luxury sector earnings added to negative sentiment around the profit outlook for the semiconductor industry. The pound slid as a drop in UK inflation spurred increased bets on interest-rate cuts.
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The Stoxx 600 index retreated 0.4% after chipmaking machine giant ASML Holding NV extended losses following its profit warning on Tuesday. LVMH and Salvatore Ferragamo SpA led the retreat in luxury stocks after weak updates, both slumping as much as 7%. US equity futures were little changed.
ASML’s slide sent ripples across the industry, resulting in more than $420 billion market value loss for an index of US-traded chipmakers and the largest Asian stocks. Nvidia Corp. sank nearly 5% on Tuesday, after reaching a record close earlier this week
“The tech-led retreat triggered by the slump in chipmakers not only echoes earlier skepticism over the AI-driven rally but, more broadly, the slowdown in this economy-sensitive industry certainly does not bode well for the global economic outlook,” said Hebe Chen, an analyst at IG Markets.
Sterling slid 0.6% to $1.2990, its lowest level since Aug. 20. Figures Wednesday showed consumer prices rose just 1.7% in September compared to a year earlier, less than forecast by economists. The data emboldened investors to bet on more aggressive easing from the Bank of England.
Bloomberg’s dollar index ticked higher after climbing to its highest level in about two months when former President Donald Trump defended proposals to raise tariffs on foreign imports. Atlanta Fed President Raphael Bostic said he expects the US economy to slow this year but to remain robust, adding that the downward path for inflation could see some bumps. Treasury yields edged lower.
In Asia, a Bloomberg gauge of China’s property shares surged as much as 8.3% as markets prepared for a joint news conference to be held by government officials including the housing minister and central bank on Thursday.
Chinese stocks have whipsawed since late September, when a series of stimulus measures by the central bank unleashed a burst of optimism that has begun to unravel. Many investors are still optimistic enough to see if the authorities are willing to deploy greater firepower to bolster the economy.
Any announcements “may only help property stocks for one or two days, but not the overall market,” said Kenny Wen, head of investment strategy at KGI Asia Ltd. “Only the property sector will be benefit” and investors are still waiting for several trillion yuan fiscal package, he said.
The yen traded at around 149 per dollar after Bank of Japan Board Member Seiji Adachi emphasized the need for taking a gradual approach to raising the benchmark interest rate.
Oil Gains
Oil climbed as Israel said it would make its own decision on how to attack Iran, keeping open the possibility that energy infrastructure may be targeted. Crude has had a roller-coaster ride this month, with prices buffeted by tensions in the Middle East, as well as China’s efforts to revive growth in the largest importer.
“It looks like dealers simply have their machines tied to oil futures these days,” said Christoph Rieger, head of rates and credit research at Commerzbank AG. “Whether it makes sense to adjust your long-term inflation view on the back of this is a different question.”
Key events this week:
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Morgan Stanley earnings, Wednesday
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ECB rate decision, Thursday
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US retail sales, jobless claims, industrial production, Thursday
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Fed’s Austan Goolsbee speaks, Thursday
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China GDP, Friday
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US housing starts, Friday
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Fed’s Christopher Waller, Neel Kashkari speak, Friday
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 fell 0.3% as of 8:30 a.m. London time
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S&P 500 futures were little changed
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Nasdaq 100 futures rose 0.1%
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Futures on the Dow Jones Industrial Average were little changed
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The MSCI Asia Pacific Index fell 0.8%
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The MSCI Emerging Markets Index fell 0.5%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0883
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The Japanese yen was little changed at 149.18 per dollar
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The offshore yuan rose 0.1% to 7.1273 per dollar
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The British pound fell 0.6% to $1.2995
Cryptocurrencies
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Bitcoin rose 0.6% to $66,907.38
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Ether rose 1.2% to $2,604.16
Bonds
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The yield on 10-year Treasuries declined two basis points to 4.02%
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Germany’s 10-year yield declined two basis points to 2.20%
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Britain’s 10-year yield declined six basis points to 4.10%
Commodities
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Brent crude rose 0.7% to $74.78 a barrel
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Spot gold rose 0.5% to $2,675.58 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Kurt Schussler, Yuling Yang, Jake Lloyd-Smith and Zhu Lin.
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