European equities follow worldwide tech downturn

The decline in technology shares has extended into European trading this morning, with the Stoxx Europe 600 falling 0.5 percent as its technology component drops 1 percent.

ASML, the Dutch specialist in chip production tools, has declined 4 percent. Infineon Technologies, the German semiconductor manufacturer, is also lower by roughly 4 percent. STMicroelectronics has slipped 4.7 percent.

Britain's FTSE 100 index is moving against the broader trend thanks to limited technology weighting. It stands among the few European markets posting gains, rising a slight 0.2 percent.

The downturn has moved from American exchanges through Asian sessions into Europe, as investors question the durability of this year's AI-fueled market advance.

Japan's Nikkei 225 index fell nearly 5 percent, while chip producer Kioxia plunged 16 percent. China's SSE Composite declined 3.3 percent. South Korean markets, highly responsive to semiconductor weakness, remain shut today.

The moves follow sharp drops among American memory and storage firms yesterday, as Sandisk, Western Digital and Seagate each lost more than 9 percent. Semiconductor names Intel and Micron both retreated around 6 percent.

Key events

16m agoMortgage rates climb with fresh Middle East strains
1h agoEuropean equities follow worldwide tech downturn
1h agoChina expresses strong discontent over British Steel nationalisation
1h agoEU border disruption expected at Dover as peak summer weekend approaches
2h agoJapanese equities heading toward weakest session since March
2h agoIntroduction: Global tech stocks slide as chip sell-off deepens

Mortgage rates climb with fresh Middle East strains

At least 13 major UK lenders have raised mortgage rates this week, as renewed conflict in the Middle East fuels expectations for elevated inflation and borrowing costs.

Barclays, Nationwide Building Society and NatWest have all lifted rates this week, according to analyst Moneyfacts. The firm reports that the average two-year fixed mortgage rate has increased 4 basis points to 5.5 percent. The average five-year rate has also risen 4 basis points to 5.52 percent.

Adam French, head of consumer finance at Moneyfactscompare, said:

Although these moves appear modest on their own, they highlight how fast borrowing expenses can shift when markets turn unsettled.
The latest shipping disruption in the Straits of Hormuz has lifted investor expectations that inflation and interest rates will stay higher for longer, raising funding costs. Lenders therefore have little option but to adjust pricing, even without any change in the Bank of England base rate.
A more uncertain world brings higher costs, and recent periods show borrowers cannot assume rates will keep moving in one direction. Inflation surprises and sentiment shifts can change expectations rapidly. While lender competition remains healthy, volatility has paused the recent rate-cutting phase. Borrowers should therefore monitor choices closely and obtain independent guidance.

Mortgage rates are also increasing in the United States, reaching their highest level in nearly a year, according to lender Freddie Mac yesterday.

The average 30-year fixed loan, the US benchmark, reached 6.55 percent, up from 6.49 percent the prior week. Rates last stood at that level in August.

Christopher Forbes, head of Asia and Middle East at CMC Markets, told Reuters that recent technology earnings had remained solid despite the market response.

Yet it illustrates how much optimism was already priced in. SpaceX offers a useful gauge of current sentiment, trading below its IPO level.
I see no signs of panic yet, with investors turning to gold and silver, though those positions have underperformed.
The reality is that markets are watching yields rise, which explains the equity retreat.

Kei Okamura, a portfolio manager at Neuberger Berman in Tokyo, noted that the Federal Reserve may have contributed to the technology sell-off.

Kevin Warsh and his remarks, along with shifting views toward what looks like tighter Fed policy, triggered a wave of profit-taking in chips.
Selling pressure gained momentum, beginning with high-profile names such as SK Hynix and Samsung, then spreading further.
The Nikkei is performing poorly, if not worse than other indices. The term bloodbath fits because weakness is widespread.

European equities follow worldwide tech downturn

The decline in technology shares has extended into European trading this morning, with the Stoxx Europe 600 falling 0.5 percent as its technology component drops 1 percent.

Britain's FTSE 100 index is moving against the broader trend thanks to limited technology weighting. It stands among the few European markets posting gains, rising a slight 0.2 percent.

The downturn has moved from American exchanges through Asian sessions into Europe, as investors question the durability of this year's AI-fueled market advance.

China expresses strong discontent over British Steel nationalisation

The Chinese government has voiced strong dissatisfaction with the decision to bring British Steel into public ownership this week, 15 months after the UK stepped in to avert closure of the Scunthorpe works and the loss of 4,000 jobs.

British Steel was placed under state control yesterday to safeguard steel production, the government said. The firm had been owned by Chinese group Jingye.

The Department for Business and Trade stated that nationalisation was required to sustain output at the Scunthorpe site in Lincolnshire and to protect UK supply chains.

China's Ministry of Commerce said the action dealt a severe blow to Chinese firms' confidence in UK investment.

The Labour government assumed operational control of British Steel in April last year after Jingye threatened to exit without measures to keep the Lincolnshire blast furnaces running.

EU border disruption expected at Dover as peak summer weekend approaches

With many preparing to begin summer holidays this weekend, Gwyn Topham reports that millions of drivers are set to take to British roads, raising concerns of congestion as the port of Dover faces its sternest challenge yet from new EU border rules.

The partially operational entry-exit system is cited, together with heatwaves and flight concerns linked to the Iran conflict, for driving domestic holiday bookings to their highest level since Covid restrictions ended overseas travel.

Motoring groups anticipate that this Friday will mark the busiest summer weekend for leisure journeys within the UK.

The port of Dover is preparing for lengthy queues as thousands of holidaymakers join lorries at Britain's primary Channel crossing from 6am.

Read the full story here:

As Reid notes, the disappointing earnings from streaming service Netflix last night are adding to today's market negativity.

Its shares fell more than 8 percent in after-hours trading after the company projected revenue growth of 11.7 percent, the smallest year-on-year quarterly rise in over two years.

Investors are also concerned about rising competition for viewer attention from short-form video on mobile devices.

Matt Britzman, senior equity analyst at broker Hargreaves Lansdown, said the company is learning that while second-quarter results met expectations, good is no longer sufficient.

He said:

Pressure had built ahead of the figures, with investors questioning whether Netflix can maintain engagement as YouTube and short-form platforms vie for attention. Viewing hours rose 2 percent in the first half despite major sports events elsewhere, while the drop-off between first and second seasons eased slightly. That should calm the most pessimistic concerns, yet Netflix's choice to issue its detailed engagement report once a year rather than twice is unhelpful.
Netflix remains the leading long-form streaming platform, supported by strong content creation and an expanding advertising business. However, the investment case is growing more complex as revenue growth slows and competition for viewer time increases.
Live events, partnerships, video podcasts and a possible free tier in selected markets could widen the audience, but these efforts are still early and their financial effects remain unclear. The market's message is that solid financial results alone may no longer suffice.
Investors seek clearer proof that Netflix can sustain engagement, and reducing disclosure of one of the few metrics offering insight into viewing habits makes assessment harder.

Japanese equities heading toward weakest session since March

Jim Reid at Deutsche Bank says the Japanese Nikkei index is now set for its weakest day in more than three months.

The Nikkei is currently on track for its weakest day since March and is also moving into technical correction territory after falling more than 12 percent from its peak less than a month ago.
No single catalyst drove the sell-off, but TSMC's earnings, released shortly after markets closed yesterday, saw its shares drop 5.26 percent today after the firm raised its capital expenditure forecast.
Netflix's results also disappointed after the close last night, sending its shares nearly 9 percent lower in after-hours trading. In the background, concerns over rate increases and persistent inflation remain, with Brent crude oil rising another 1.06 percent this morning to $85.12 per barrel. That would mark its first close above $85 in over a month, and the combination of technology and inflation worries has dented the more positive tone following the soft US CPI report earlier this week.
Before the overnight acceleration, US equities had already endured a difficult session yesterday due to the renewed slide in chip stocks. The Philly semiconductor index fell 4.29 percent to an eight-week low, having now dropped 18.91 percent from its peak less than a month ago. It now sits close to the 20 percent threshold that would signal the technical start of a bear market, a sharp reversal from the second quarter when it recorded its best quarterly performance since the index began in the early 1990s.

Introduction: Global tech stocks slide as chip sell-off deepens

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

The past 24 hours have been difficult for many of the world's largest technology companies, with Asian markets falling today as weakness among US chip and memory stocks spread overnight.

Japan's Nikkei 225 index dropped nearly 5 percent, while chip producer Kioxia slumped 16 percent. China's SSE Composite declined 3.3 percent. South Korean markets, highly responsive to semiconductor weakness, remain shut today.

The moves follow sharp drops among American memory and storage firms yesterday, with Sandisk, Western Digital and Seagate each losing more than 9 percent. Chip companies