Global financial markets remained under pressure during European trading on Friday, as a sustained selloff in technology stocks continued to weigh heavily on investor sentiment. Asian equity markets recorded steep declines, and futures pointed to further weakness on Wall Street, reflecting a broad risk-off mood among market participants.
Technology Stocks Drive Market Weakness
Concerns over rising chip costs and persistent inflation have prompted a reassessment of the sustainability of the artificial intelligence-driven rally in technology stocks. This reassessment has led to sharp losses across Asian markets. South Korea's KOSPI fell approximately 8% on Friday, while Japan's Nikkei 225 Index declined around 4.5%. The weakness extended to futures markets, with Nasdaq Futures dropping more than 1% during the early European session.
For investors focused on the tech sector, the selloff has been particularly acute. Qualcomm's stock dipped 6% amid reports of a $4 billion modular AI deal, highlighting the pressure on even well-positioned companies. Similarly, Apple stock came under scrutiny after CEO Tim Cook warned of unavoidable price hikes on memory costs, adding to the sector's headwinds.
US Dollar Holds Steady After Inflation Data
The US Dollar Index remained broadly stable just below the 101.50 level after posting modest losses on Thursday. According to data released by the US Bureau of Economic Analysis, the Personal Consumption Expenditures (PCE) Price Index increased 4.1% year-on-year in May, matching market expectations and following a 3.8% rise in April.
Additional US economic data painted a mixed picture. Durable Goods Orders declined 4.5% month-on-month in May, while Initial Jobless Claims stood at 215,000 for the latest reporting week. Market participants are now looking ahead to speeches from several US Federal Reserve policymakers later in the day, as well as the upcoming revision of the June Consumer Sentiment Index from the University of Michigan.
Japanese Inflation in Focus
Economic data from Japan showed that the Tokyo Consumer Price Index increased 1.7% year-on-year in June, up from 1.4% in May. Despite the inflation data, the USD/JPY currency pair traded within a narrow range above the 161.50 level during the European session, suggesting limited immediate market reaction.
Euro and Pound Trade in Narrow Ranges
The euro remained relatively stable against the US dollar. EUR/USD posted modest gains on Thursday and held above the 1.1350 level during Friday's European trading, though the currency pair struggled to establish a clear directional trend.
The British pound also traded with limited movement. GBP/USD remained around the 1.3200 mark after advancing roughly 0.2% in the previous session. The pound continued to receive marginal support as markets assessed political developments in the United Kingdom, with investors focusing on speculation surrounding the country's next finance minister under a potential administration led by Andy Burnham. Market attention also remained on softer US inflation data, which reduced expectations for further US interest rate hikes.
The combination of weakness in technology shares, mixed economic data, and political developments in the UK kept investors cautious as markets searched for fresh catalysts heading into the weekend.
This article is for informational purposes only and does not constitute financial advice.
