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Global stocks drop on semiconductor rout; oil gains on Middle East tensions

Created at 17 Jul · 11:26 AM2 sources↑ Market-relevant2 events
IN SHORT

Global stocks plunged Friday, led by chipmakers, as Middle East tensions escalated and investors reassessed AI rally gains. Oil prices surged over 11% for the week, while the US dollar remained steady.

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Key Numbers

11%weekly gain for Brent and US crude futures
6%drop in Taiwan's stock market
3.6%drop in China's blue-chip index
1.8%drop in Hong Kong's Hang Seng Index
4.4%drop in Hang Seng Tech Index
0.7%fall in STOXX 600
4%drop in Nikkei
12%Nikkei's decline from recent peak
2.2%slump in Nasdaq futures
1.1%fall in S&P 500 futures
US$84.75Brent crude futures price
US$79.80US crude futures price
26 basis pointsFed hikes priced in by December
162.39Yen to US dollar exchange rate

Who's Involved

Donald Trump
US President whose 'Liberation Day' tariffs preceded Taiwan's worst day
ASML
Dominant supplier of equipment for high-tech computer chips
TSMC
Taiwanese semiconductor manufacturer
Lars Skovgaard
Investment strategist at Danske Bank
Fabien Yip
Market analyst at IG
Satsuki Katayama
Japanese Finance Minister
Global stocks drop on semiconductor rout; oil gains on Middle East tensions

↳ Why This Matters

The sharp decline in chipmakers and broader stock markets, coupled with escalating Middle East tensions impacting oil prices, signals significant global economic uncertainty and potential shifts in investor sentiment.

Key facts

  • Global stock markets declined sharply due to a selloff in chipmakers.
  • Asian markets, particularly Taiwan, experienced significant drops.
  • European equity indexes also traded lower.
  • Oil prices surged over 11% for the week amid escalating US-Iran tensions.
  • US market futures indicated a weak open.
  • The US dollar held steady, with receding expectations of Federal Reserve rate increases.

Global stock markets experienced a significant downturn on Friday, primarily driven by a sharp selloff in chipmakers. This decline rippled through Asian markets, with Taiwan's stock market suffering its worst day since US President Donald Trump's 'Liberation Day' tariffs, plunging over 6%. China's blue-chip index fell 3.6%, and Hong Kong's Hang Seng Index dropped 1.8%, with its tech index down 4.4%.

European equity indexes also traded lower, with the STOXX 600 falling 0.7%. Major bourses in Paris and Frankfurt saw declines, while Britain's FTSE remained flat. Analysts noted Europe's relative insulation due to a smaller technology hardware sector.

In commodities, oil prices surged, with Brent crude futures up 0.6% at $84.75 a barrel and US crude up 1.1% at $79.80. Both benchmarks were set for gains of over 11% for the week, their largest since April, following renewed military strikes in the Middle East. Iran reported fresh attacks on US facilities in the Gulf, following US strikes on Iranian military sites.

US market futures indicated a weak open, with Nasdaq futures down 2.2% and S&P 500 futures down 1.1%. South Korean markets were closed for a holiday, but authorities had previously announced temporary bans on new listings of certain technology-linked ETFs and increased deposit requirements to curb volatility.

The US dollar held steady, with receding expectations of Federal Reserve rate increases this year offset by safe-haven demand. Investors are now pricing in approximately 26 basis points of Fed hikes by December. The euro was flat against the dollar, while sterling saw a slight increase. The Japanese yen continued to trade near a 40-year low, prompting intervention warnings from Japanese officials.

Frequently asked questions

A steep selloff in chipmakers triggered the global stock market rout, exacerbated by renewed military strikes in the Middle East.

Asian markets, particularly Taiwan, experienced significant declines. European indexes also fell, though to a lesser extent.

Oil prices surged over 11% for the week, their largest gains since April, due to escalating US-Iran tensions, and are expected to remain elevated.

Expectations for Federal Reserve rate increases this year have receded, with investors pricing in approximately 26 basis points of hikes by December.

What Happens Next

01Investors await further developments on US-Iran tensions and their impact on oil prices.
02Market participants will monitor upcoming US economic data for clues on the Federal Reserve's rate path.
03Further volatility is expected in technology and semiconductor stocks.

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Cadence
CME Headlines
  • Initial Listing of Fifty-Five (55) Single Stock Futures and Twenty-Two (22) Micro Single Stock Futures Contracts
    16 Jul · 9:15 PM
  • Equity index futures fell as chip stocks dragged down markets.
    16 Jul · 8:07 PM
  • Equity index futures fell as chip stocks dragged down markets.
    16 Jul · 8:07 PM

How It Developed

Global stocks fell sharply, led by chipmakers, amid Middle East conflict and inflation fears.
A sharp selloff in chipmakers triggered a global market rout, with Asian shares plunging and futures pointing to steep losses in Europe and the U.S.
Investors reevaluated the artificial intelligence rally, leading to a broad flight from risk across the Asia-Pacific region.

Sources

T1
Stocks drop on deepening semiconductor rout; oil set for weekly gainPiQSuite
T1
Stocks sink as chip rout deepens, oil set for weekly gainPiQSuite
T2
Global stocks drop on deepening semiconductor rout, oil set for weekly gainfreemalaysiatoday.com
T2
World stocks drop on deepening semiconductor rout; oil set for weekly gaintheedgemalaysia.com

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