Global tech stocks fall as chip sell-off deepens; Burberry sales boosted by gen Z shoppers – business live

Christopher Forbes, head of Asia and Middle East at CMC Markets, told Reuters that he thought that recent tech earnings had been robust, despite the market reaction.

But it just shows how much was baked into the price. SpaceX is a pretty good ⁠proxy for market sentiment right now, and it’s below the IPO price.

I’m still not seeing any panic — people are buying gold and silver and those have been losing trades.

But the reality is that the world is watching yields go higher…hence the market is selling off.

Kei Okamura, a portfolio manager at Neuberger Berman in Tokyo, added that the Federal Reserve may also have been a trigger for the sell-off in tech stocks.

Kevin Warsh and ‌his comments and changing views towards what appears to be quite hawkish Fed policy started a cascading effect towards taking chips off the table.

We started to get a lot more momentum in terms ‌of the selling pressure, first off with the very high profile names like SK Hynix and Samsung, but from there it has kind of spread.

So the Nikkei is trending as bad, if not a little bit worse. The word ’bloodbath’ is accurate because it is across the board.

The tech sell-off has spread to European stock markets this morning: the Stoxx Europe 600 is down 0.5%, led by a 1% decline in its tech sector.

ASML, a Dutch business which specialises in making chip manufacturing equipment, is down 4%. Infineon Technologies, a German chip producer, is also down by about 4%. STMicroelectronics is down 4.7%.

The UK’s blue chip FTSE 100 is bucking the trend given its low exposure to the tech sector. It is one of the only markets rising in Europe this morning, up by a modest 0.2%.

The Chinese government has said it is “strongly dissatisfied” with the decision to nationalise BritishSteel this week, 15 months after the UK government stepped in to prevent the closure of its steelworks in Scunthorpe and the loss of 4,000 jobs.

Yesterday British Steel was brought under public ownership to protect “the future of steel production”, the government announced. The company was previously owned by the Chinese group Jingye.

The Department for Business and Trade said the decision to nationalise the business was essential to maintain steel production at its site in Scunthorpe, Lincolnshire and to protect its future and UK supply chains.

However, China’s Ministry of Commerce (Mofcom) said in a statement that the move dealt “a severe blow to Chinese companies’ confidence in investing in the UK”.

The Labour government took operational control of British Steel in April last year, after Jingye threatened to walk away without taking steps to preserve the blast furnaces in Lincolnshire.

And to those of you preparing to kick off the summer holiday season this weekend – Gwyn Topham reports that millions of drivers are expected on British roads, with concerns of traffic chaos as the port of Dover faces its biggest test yet of new EU border controls.

The semi-functioning entry-exit system (EES) is credited, along with the heatwaves and fears about flights after the war in Iran, with helping push British domestic holidays to its highest levels since Covid halted international travel.

Motoring organisations expect this Friday to kick-off the busiest summer weekend for domestic leisure trips.

The port of Dover is bracing for long tailbacks as thousands of holidaymakers join lorries at Britain’s main Channel ferry crossing from 6am.

Read the full story here:

As Reid points out, downbeat earnings report from the streaming giant Netflix last night is also feeding some of the negativity in the stock market today.

Its shares fell more than 8% in after-hours trading, after the company forecast revenue growth of 11.7%, which would be its smallest year-on-year quarterly increase in more than two years.

Investors are also growing fearful around increased competition for engagement, as viewers’ attention can be easily snapped up by short-form video content on their phones.

Matt Britzman, a senior equity analyst at the broker Hargreaves Lansdown, said the company is finding out that while its second quarter performance was in line with expectations, “good is no longer good enough”.

He said:

Pressure had been building ahead of the results, with investors questioning whether Netflix can keep viewers engaged as YouTube and short-form platforms compete for attention. Viewing hours actually grew 2% in the first half, despite major sporting events elsewhere, while the drop-off between first and second seasons improved slightly. That should ease the most bearish fears, but Netflix’s decision to publish its detailed engagement report annually rather than twice a year is unhelpful.

Netflix remains the dominant long-form streaming platform, with a powerful content engine and an advertising business that continues to scale. But the investment case is becoming more complicated as revenue growth moderates and competition for viewers’ time intensifies.

Live events, partnerships, video podcasts and potentially a free tier in selected markets could broaden the audience, but these initiatives are still developing, and their financial impact is far from clear. The market’s message is that solid financial delivery alone may no longer be enough.

Investors want clearer evidence that Netflix can sustain engagement, and scaling back the disclosure of one of the few measures that offers a window into viewing habits makes that harder to judge.”

Jim Reid at Deutsche Bank says that the Japanese Nikkei index is now on course for its worst day in more than three months.

The Nikkei is currently likely on course for its worst day since March, and also leaves the index on track for technical correction territory, having now shed over 12% since its peak less than a month ago.

There wasn’t a single catalyst behind the selloff, but we had TSMC’s earnings shortly after we went to press yesterday, and their share price is down -5.26% this morning after they said that capital expenditure would be higher than previously forecast.

Meanwhile, Netflix’s earnings disappointed after the close last night, pushing their shares almost -9% lower in after-hours trading. And in the background, fears about rate hikes and more persistent inflation are still there, with Brent crude oil up another +1.06% this morning to $85.12/bbl. That would be its first close above $85/bbl in over a month, and that combination of concerns around tech and inflation has really put a dent in the more buoyant narrative after the soft US CPI report earlier this week.

Before the slump accelerated overnight, US equities had already seen a rough session yesterday thanks to the fresh slide in chip stocks. In fact, the Philly semiconductor index (-4.29%) hit an 8-week low, having now shed -18.91% from its peak less than a month ago. So that now leaves it close to the -20% mark that would mark a technical start of a bear market, which is a big turnaround from Q2, when it posted its best quarterly performance since the index began in the early 1990s.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

It’s been a brutal 24 hours for some of the world’s biggest tech stocks, with markets in Asia falling today as a sell-off in US chip and memory stocks spread overnight.

Japan’s Nikkei 225 index dropped almost 5%, with the Japanese chipmaker Kioxia slumping 16%. The Chinese SSE Composite is down 3.3%. Markets in South Korea, which have been extremely sensitive to the chip sell off, are closed today.

It follows steep falls in memory and computer storage makers in the US yesterday, with Sandisk, Western Digital and Seagate all down more than 9%. Chip companies Intel and Micron both fell by about 6%.

The sell-off comes as investors grow increasingly nervous about whether the AI-driven rally in the market this year is sustainable.

Mohit Kumar, of the broker Jefferies, says the dominating theme in markets has been weakness in chip and tech stocks after chip manufacturer TSMC reported “underwhelming” results and guidance.

TSMC’s focus on increased capex raised market concerns around valuations and the returns on capex. The sector has been under pressure with position unwinds as it was one of the most crowded sectors in the market in June.

In our view, the market moves have been driven by high expectations and position unwinds rather than underwhelming earnings. Our positioning indices suggest that semis was one of the most crowded trades in June, with positioning of over +6.5 in the third week of June. Sharp unwinds have seen that positioning drop to +1.3 (on a scale of -10 to +10) as of yesterday close.

Elsewhere this morning, FTSE 100 fashion brand Burberry has said its retail sales rose 5% in the first quarter, led by strength in its markets in America and Greater China – and its gen Z shoppers are up by a “double digit” percentage.

Chief executive Joshua Schulman adds that for the first time in three years, the company has reported growth across all of its product categories: womenswear, menswear, accessories and children. He says:

Our strategy is working . We are attracting a broad range of luxury customers across product categories, channels and geographies , reinforcing my confidence in the opportunities ahead.

The agenda

Today: Andy Burnham to be named Labour leader

7am BST: Burberry Q1 update

9am BST: EU current account figures for May

10am BST: EU harmonised CPI inflation figures for June

11am BST: United Utilities AGM

1.30pm BST: US housing starts and building permits for June

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