Tech sell off spreads to Europe and Asia,
politics lift euro
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[June 12, 2017]
By Marc Jones
LONDON (Reuters) - Technology stocks fell
across Europe and Asia on Monday after the worst day for Apple <AAPL.O>
shares in more than a year, while the euro and European bonds were
lifted by positive pro-European news in France and Italy.
Apple's near 4-percent fall on Friday hit Asian rivals including Samsung
<005930.KS> and Europe's big chipmakers STMicro <STM.PA> and Dialog
Europe's tech index <.SX8P> fell 3 percent to put it on track for its
biggest one-day loss since Britain's Brexit vote a year ago. The index
had reached a 15-year high earlier this month and has soared around 40
percent over the last year.
The pan-European STOXX 600 <.STOXX> was down 0.6 percent, supported by
modest gains in oil prices, which lifted shares in energy stocks, and by
first round French parliamentary election results which look set to give
President Emmanuel Macron a huge majority to push through pro-business
Italy also offered some support after the eurosceptic 5-Star Movement
failed to make the run-off vote in almost all the main cities up for
grabs in local elections.
Italian government bond yields fell to their lowest since January
<IT101YT=TWEB> and Portugal's to nine-month lows <PT10YT=TWEB>, while
French bonds closed the gap on Germany. [GVD/EUR]
"Macron doing well in the first round of the French parliamentary
elections bodes well for him getting a majority," said Lyn
Graham-Taylor, fixed income strategist at Rabobank.
"The fact that 5-Star did poorly in local elections in Italy also
suggests a setback for populism in Europe."
The euro rose back to $1.1220 <EUR=EBS> in the currency markets, where
anticipation is building ahead of Wednesday's conclusion of a two-day
U.S. Federal Reserve meeting at which the central bank is expected to
nudge up U.S. interest rates.
But economists will be watching to see whether the recent dip in
economic data and uncertainty surrounding President Donald Trump has
Britain's sterling was in focus again as it slipped back below $1.27
<GBP=D3> [GBP/] and 88.30 pence per euro <EURGBP=> as Prime Minister
Theresa May attempted to prop up her position after last week's damaging
A survey from one of the UK's biggest business groups showed confidence
had been hit hard by the election ahead of the start of Brexit
negotiations with the EU next week.
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A man shelters under an umbrella as he walks past the London Stock
Exchange in London, Britain August 24, 2015. REUTERS/Suzanne
"It is hard to overstate what a dramatic impact the current
political uncertainty is having on business leaders," said Stephen
Martin, director general of the Institute of Directors. "The
consequences could – if not addressed immediately – be disastrous
for the UK economy."
Futures markets pointed to further losses for tech-stocks when Wall
Street resumes. The tech-heavy Nasdaq was seen down 0.8 percent
<NQc1> after an almost 2 percent drop on Friday had consigned it to
its third biggest one-day loss of the year. [.N]
While year-to-date Nasdaq gains of more than 15 percent have
outperformed the wider market, the ebbing of the Trump reflation
trade and the slide in U.S. economic surprises deep into negative
territory, has prompted some strategists and investors to review the
mix of their portfolios.
The G10 economic surprise index, capturing the world’s 10 leading
economies, has just dipped below zero for the first time in 8
months. JPMorgan, said the ‘reduced upside risk to growth and
inflation’ has led it to underweight growth sensitive stocks and
assets in favor of high income plays.
It is also feeding into dollar weakness. The greenback was a shade
lower at 110.040 yen <JPY=> and the dollar index against a basket of
currencies nudged down to 97.118 <.DXY>, easing back from a nine-day
high hit at the end of last week.
In commodities, crude oil prices extended gains after rising on
Friday when a pipeline leak in major producer Nigeria overpowered
supply worries weighing on the market. [O/R]
U.S. crude <CLc1> and Brent <LCOc1> were both more than 1 percent
higher at $46.41 and $48.80 a barrel respectively, copper <CMCU3>
was steady while gold <XAU=> snapped a three-day losing streak to
climb to $1,269 an ounce. [GOL/]
(Additional reporting by Dhara Ranasinghe and Patrick Graham in
London; Editing by Andrew Heavens and Alexander Smith)
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