Global stocks fall as US export controls hit chipmakers
European and Asian stocks fell on Tuesday as investors worried about rising interest rates and the impact of US export restrictions on the world’s largest chipmakers.
The regional Stoxx 600 fell 0.5 percent at the open, while the German Dax index fell 0.7 percent.
In Asia, Hong Kong’s Hang Seng index fell 1.7 percent to its lowest level in nearly 11 years as tightening restrictions from Washington on critical technology exports impacted the tech sector.
Semiconductor and related technology stocks have fallen sharply since Washington introduced new export controls last week to limit Beijing’s plans for technological self-sufficiency. The restrictions limit the sale of semiconductors made using US technology unless the sellers obtain an export license.
The Philadelphia Semiconductor Index fell 3.5 percent on Monday after China’s largest semiconductor companies collectively lost $8.6 billion in market cap earlier in the day.
All Japanese, South Korean and Taiwanese semiconductor companies, protected from the market fallout of the new bans by a Monday holiday, fell on Tuesday. The Japanese Topix closed down 1.9 percent.
Nervousness about Chinese growth is adding to an already difficult picture for global markets, which have been held back for much of the year by concerns that central banks’ efforts to tame rampant inflation by raising interest rates will trigger a recession.
CPI data due Thursday will give investors more insight into the impact of the Federal Reserve’s rate-hiking policy on rising prices. Economists polled by Reuters expect the headline figure to fall to 8.1 percent in the year to September, down from 8.3 percent in the previous month.
Ahead of the data and the start of US corporate earnings season this week, the broad S&P 500 closed down 0.8 percent on Monday, while the Nasdaq Composite was down 1 percent. Futures markets showed continued risk-off sentiment on Tuesday, with contracts tracking the S&P 500 and Nasdaq 100, both down 0.8 percent.
In government bond markets, the Bank of England expanded its government bond-buying program after a sell-off on Monday pushed up the UK’s long-term borrowing costs.
The bank will add index-linked gilt purchases to its program to “combat dysfunctions in this market and the prospect of self-reinforcing ‘fire-sale’ momentum, [which] pose a significant risk to UK financial stability,” it said.
Gilts reacted mutedly in early trade, with 30-year gilt yields falling 0.1 percentage point to 4.6 percent. Ten-year yields fell 0.07 percentage points to 4.4 percent as bond prices rose.
Among currencies, the dollar is up 0.2 percent against a basket of six counterparts, extending its 18 percent gain so far this year. The pound slipped 0.15 percent against the greenback to trade just above $1.10.
Additional reporting by William Langley in Hong Kong
https://www.ft.com/content/91c5e844-96bd-43e4-8b22-e72cf760b2f1 Global stocks fall as US export controls hit chipmakers