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

Tech Sector Under Pressure

Global technology stocks are facing a widespread sell-off, with the chip sector particularly hard hit. This downturn has spread from Asian markets, notably impacting major players like SK Hynix and Samsung, to European exchanges, where the Stoxx Europe 600's tech sector saw a 1% decline. Companies specializing in chip manufacturing equipment, such as ASML, and German chip producers like Infineon Technologies, have seen their shares fall by approximately 4%. This market reaction suggests that previous robust tech earnings may have already been "baked into the price," as noted by Christopher Forbes of CMC Markets, indicating that investor sentiment has shifted towards caution.

Portfolio managers, such as Kei Okamura of Neuberger Berman, attribute part of this tech stock decline to hawkish comments from figures like Kevin Warsh regarding Federal Reserve policy. This has created a "cascading effect" of selling pressure, leading to what some describe as a "bloodbath" across the board. The Japanese Nikkei index is experiencing one of its worst days, mirroring the broader tech downturn. In contrast, the UK's FTSE 100 has managed to buck the trend, showing a modest rise, primarily due to its lower exposure to the volatile technology sector, illustrating a divergence in market performance based on sectoral composition.

Rising Borrowing Costs Amid Geopolitical Tensions

Mortgage rates are on the rise in both the UK and the US, directly linked to renewed conflict in the Middle East, specifically disruptions to shipping in the Straits of Hormuz. This geopolitical instability is fueling expectations of persistent higher inflation and, consequently, higher interest rates. In the UK, at least 13 major lenders, including Barclays and NatWest, have increased their mortgage rates, with the average two-year new mortgage rate rising by 4 basis points to 5.5%. Adam French of Moneyfactscompare emphasized that such increases, though seemingly modest, underscore how quickly borrowing costs can escalate when markets become unsettled, forcing lenders to reprice products even without a direct Bank of England Base Rate change. Similarly, in the US, the average 30-year fixed loan has reached 6.55%, its highest level in almost a year, according to Freddie Mac. This trend indicates a "more volatile world is a more expensive world," impacting consumers and their ability to borrow.

International Relations and Industrial Policy

Beyond market fluctuations, the article also touches on significant developments in international trade and industrial policy. The Chinese government has expressed "strong dissatisfaction" with the UK's decision to nationalize British Steel. This move comes 15 months after the UK government initially intervened to prevent the closure of the Scunthorpe steelworks and the loss of 4,000 jobs. British Steel, previously owned by the Chinese group Jingye, was brought under public ownership to safeguard "the future of steel production" and protect UK supply chains. This nationalization highlights the increasing trend of governments intervening in strategic industries, potentially leading to friction with foreign investors and raising questions about global trade relations and economic sovereignty.